Table of Contents. Financial calendar

Transcription

1 Annual report 2014

2 Table of Contents The year in brief 1 Statement by the CEO 2 Board of Directors Report 5 Corporate Social Responsibility 12 Corporate Governance Report 15 Special Items 25 Financial Report Group Statement of Income 26 Balance Sheet 27 Cash Flow 29 Statement of Changes in Equity 30 Notes 31 Financial Report Parent Company Statement of Income 54 Balance Sheet 55 Cash Flow 57 Notes 58 Responsibility statement 62 Auditors report 63 Board of Directors 64 Group Management 66 Financial calendar Q May 12, 2015 Annual General Meeting May 13, 2015 Q August 12, 2015 Q November 12, 2015 RenoNorden b

3 The year in brief RenoNorden is the Nordic region s leading domestic waste collection services Group. The Group has significant scale, with 1,448 employees providing services to over five million people on behalf of more than 230 municipalities across Norway, Sweden, Denmark and Finland. Operating revenues for 2014 were NOK 1.6 billion, reflecting an increase of 24.5% compared to 2013, of which 6.1% was organic. EBITDA (excluding special items) was NOK million (227.0 million in 2013). EBIT (excluding special items) was NOK million compared to million in Net cash generated from operating activities was NOK million in 2014 compared to million in Earnings per share (excluding special items) was NOK 13.8 (10.0 in 2013). The Board of Directors proposes to pay NOK 50 million in dividends for the 2014 fiscal year, equal to a dividend per share of NOK Group highlights NOK millions Operating revenues 1, ,268.3 EBITDA EBITDA margin 15.2% 17.6% EBIT EBIT margin 8.4% 10.8% Net income Earnings per share (NOK) Dividend per share (NOK) Average no. of shares outstanding (million) Group highlights excluding special items NOK millions EBITDA EBITDA margin 17.1% 17.9% EBIT EBIT margin 10.4% 11.2% Net income Earnings per share (NOK) Number of employees 1,448 1,273 Operating revenues 2014 NOK million EBITDA excluding special items 2014 NOK million Norway Sweden Denmark Finland -30 Norway Sweden Denmark Finland Other RenoNorden 1

4 Statement by the CEO During the year, we continued on our path of growth and operating revenues increased 24.5% to NOK 1.6 billion, largely driven by a successful acquisition in Finland of HFT. Our underlying organic growth ended the year at around 6.1%, and was primarily a result of additional volumes from new contracts won during the year. Notwithstanding continued price pressure in the market, we reported an EBITDA, excluding special items related to the IPO, of NOK million, a margin of 17.1%. This achievement was attributable to our successful efforts to strive for improved operational efficiency as well as our unique pan-nordic scale. Since 2004, we have grown by an annual average of 26% through a combination of acquisitions and organic growth. Accordingly, we have served as a driver for consolidation in our industry marked a year of change for RenoNorden, in which one of the obvious highlights was our Initial Public Offering (IPO) and listing on the Oslo Stock Exchange in December. Our listing marks the dawn of a new era and makes us even more visible as the Nordic region s leading domestic waste collection specialist. We currently provide services to more than five million people across the four Nordic countries, on behalf of more than 230 municipalities - a position that we are proud of. Strong development in all segments Looking at the various segments in the Group, it is notable that Norway generated operating revenue in 2014 of NOK 585 million, a growth of 6.6%. In Sweden, operating revenue for 2014 developed well and was up 7.6% to NOK 339 million, primarily driven by market share gains. The Danish operation generated operating revenue of NOK 422 million in 2014, an increase of 4.4%. Finland s operating revenues in 2014 amounted to NOK 234 million, which was a solid development on the prior year and in line with our expectations. Successful operating model with high customer focus Our operating model has proven to be successful and our specialist focus and pan-nordic coverage are two of our key competitive strengths. Our operation is based on strong local management with RenoNorden 2

5 delegated responsibility and full accountability to optimize the local operation and ensure successful execution of each individual contract with local customers. To ensure comparability and focus on critical success factors, all contracts are monitored based on Group KPIs. The local organizations are supported by central hubs of excellence, across our Nordic region, that provide support in implementing improvements and best practice solutions, while constantly driving innovation and developing new solutions in order to provide a truly differentiated service to our customers. Our scale gives us the opportunity and resources to invest in systems and specialized competences, such as route planning and fleet management that will ensure more efficient solutions and best in class service to our customers. People development We emphasize developing our leaders and employees, who are our core resource in delivering consistent quality and superior customer service, and thereby building our brand towards customers and the public, every day throughout the year. In our joint effort to build an even stronger Group going forward, our core values of quality, respect, efficiency and environment are steering our priorities. Continuous improvements We strive towards continuous improvements by driving increased efficiency across all levels. During 2014, we have worked hard to identify improved solutions that will lead to best practices across geographies. Smart solutions in one market can in many cases be transferred to other markets, supported by a central operational efficiency team across the countries. A central fleet management system has successfully been implemented to reduce fuel consumption and maintenance costs, and reduce the environmental impact of our operation. In order to benefit from our economy of scale, a number of shared Group sourcing initiatives have been initiated that will further strengthen our competitive position in an increasingly tough competitive environment. of waste handling. Our customers are increasingly focusing on environmental standards relating to our operation, and new standards are continuously being incorporated in their tenders. As a consequence, we are now operating more and more vehicles that run on eco-friendly natural gas and we work closely with our customers to support more recycling among consumers. Outlook We estimate that the annual growth potential in the market is around 3-4% for the next 4-5 years, somewhat depending on the timing of and the size of tenders coming to market. Given the signs of increased maturity and competitive pressure we need to work hard to further develop and execute on our efficiency program launched in Given our structural advantages, we are confident that we can maintain a strong position as the only pan-nordic household collection specialist. RenoNorden should therefore be well positioned to win new contracts at competitive prices, while managing to operate them at good margins. This is key to pursuing continued profitable organic growth. We believe that further consolidation in the market will take place and we will consider such strategic opportunities as a complement to organic growth. Finally, I would like to thank all our employees for their hard work and commitment to the Group and our business, and I look forward to continuing our journey in a joint effort to build an even stronger Group going forward. Staffan Ebenfelt President and CEO Joint efforts with our customers in CSR Our ambition is to work closely with our customers to identify improvement areas and support their objectives to improve the environmental impact RenoNorden 3

6 One of RenoNorden s 900 trucks serving over five million people in the Nordic countries. RenoNorden 4

7 Board of Directors Report The Board of Directors report and the financial statements for the Group and the parent Company of RenoNorden ASA. Company Description RenoNorden is the market leader in providing domestic waste collection services across the Nordic region. Since the Company was established in 2000, we have experienced consistent strong growth, both organically and through acquisitions 1. Over the past decade 2, the Group has achieved annual average revenue growth of approx. 26% per annum. Today, RenoNorden has significant scale, with approx. 900 trucks and 1,448 employees servicing over five million people in more than 230 municipalities across Norway, Sweden, Denmark and Finland. The Group s business model is to be the expert services provider in this niche and to use its scale and specialist expertise to provide an unparalleled quality of service to its core municipality customers. This is a key differentiator to stay one step ahead of the competition and to safeguard margins in a mature market. Domicile The Group s head office is at Lindebergvegen 3, 2016 Frogner, Norway. For information regarding the subsidiaries of RenoNorden please refer to IPO and Market listing On December 16, 2014 RenoNorden completed an Initial Public Offering (IPO) of ordinary shares on Oslo Stock Exchange, with an issue of 6,583,785 new shares raising gross proceeds of NOK 309 million. Post IPO, total shares outstanding were 27,247,948. Summary of 2014 RenoNorden continued to deliver strong earnings development in 2014 driven by strong revenue growth, efficiency improvements, and successful innovation, through a committed and competent organization that has provided high quality services to all our customers. During the year, 36 new contracts were signed, bringing RenoNorden s total order backlog to a record of NOK 5.6 billion, including options for extensions. RenoNorden s overall CSR performance improved in 2014 and a number of new activities will take place in RenoNorden is committed to further reducing its environmental impact and to continuously working towards our goal of zero accidents. Significant progress was made during 2014 in terms of delivering improvements on fleet management and route planning as well as introducing smarter solutions for the benefit of RenoNorden s customers. 1 Historic acquisitions: : Resta s assets out of bankruptcy, including its contracts in Stockholm and Malmö : Renoflex-Gruppen A/S, regional household waste collector in Denmark : Nord-Ren A/S, regional domestic waste collector in Denmark. - Dec 2013: HFT Environment in Finland 2 Between 2004 and 2014 RenoNorden 5

8 Income Statement and cash flow Total operating revenue for 2014 was up 24.5% to NOK 1.6 billion from 2013, driven largely by the HFT acquisition in Finland, while all geographies contributed to an organic growth of 6.1%. Group EBITDA for 2014 reached NOK million, compared to NOK million for Before special items, EBITDA was NOK million (227.0) representing a margin of 17.1%. Excluding Finland, full-year EBITDA margin before special items was 18.2%, compared to 17.9% in RenoNorden s focus on implementating operational efficiency initiatives and the Group s unique pan-nordic scale are the main drivers behind this strong development. EBIT before special items was NOK million, giving a margin of 10.4%. Excluding Finland, the EBIT margin before special items was 11.3% (11.2%). RenoNorden generated a negative net change in cash and cash equivalents of NOK 66.0 million in This was as a result of refinancing of an old bank facility and IPO related costs of 26.7 million. Cash generated from operating activities was NOK million (NOK million in 2013). Net financial items was NOK 97.9 million ( 75.7) mainly due to a write-off of a NOK 24.6 million capitalized origination fees related to the old bank facility, with no cash-flow effect. Financial position and refinancing The financial position of the Group is sound and improved during Total assets were unchanged at NOK 2.2 billion at December 31, Total non-current liabilities were also unchanged at NOK 1.1 billion at December 31, Total consolidated equity was NOK million at December 31, 2014, corresponding to an equity ratio of 29.6%. Overall RenoNorden has access to various sources of financing to support its growth ambitions. At December 31, 2014, net interest bearing debt amounted to NOK 1.03 billion. Net debt/ EBITDA before special items was 3.8x. On December 16, 2014 the Group refinanced its bank debt with a new senior facility of NOK million, which was mainly used to repay the old bank loans. The Group s cash and cash equivalents amounted to NOK million as of December 31, The Group also has leasing facilities available for truck financing. Total CAPEX was NOK 147 million. Shareholder transactions During the fourth quarter of 2014, several equityrelated transactions took place, mainly in relation to the IPO. These transactions included the cancellation and reclassification of preference shares, a capital increase by a bonus issue, the ordinary share par value, and issuance of additional ordinary shares in connection with the IPO and repayment of the PIK notes. As of December 31, 2014, there are no treasury shares outstanding. For further information on Related parties and Shareholder transactions see note 22 on page 52. Segment information Norway Norway generated operating revenues of NOK million in 2014, a growth of 6.6% compared with the same period last year. A new contract in Nordfjord, inflation indexation of existing contracts and increased activity and services in existing contracts contributed to the growth. EBITDA in 2014 was NOK million compared to NOK million last year. EBITDA margin was 25.6% (23.1%). The margin improvement was mainly a result of scale advantages and the Group s continued focus and efforts on fleet management and optimization where improvements in fuel consumption, maintenance costs and lower levels of vehicle damage were noted in Sweden Sweden generated operating revenues for 2014 of NOK million, an increase of 7.6% from last year, and primarily driven by new contract wins in addition to increased activity and services on existing contracts. EBITDA in 2014 was NOK 54.3 million compared to the NOK 45.1 million generated in EBITDA margin for 2014 was 16.0% (14.3% in 2013). The increase is mainly due to positive effects from scale advantages and fleet management efforts. Reno- Norden has increased the level of additional services such as outplacement of bins, sale and washing of bins and more frequent waste collection, and taken measures to lower costs and improve efficiency, for example through substitution of sub-contractors with in-house personnel. RenoNorden 6

9 Denmark Denmark generated operating revenues of NOK million in 2014, representing a growth of 4.4% from last year. This development was driven by new contracts won as well as increased activity and services in existing contracts. EBITDA in 2014 was NOK 54.5 million compared to NOK 57.9 million last year. The EBITDA margin was 12.9% (14.3%). The decrease is due to a higher than normal level of startup costs in 2014, directly attributable to the higher win rate. These start-up costs should subside as the contracts mature. With continued rigorous focus on fleet management and Group-wide sourcing initiatives, RenoNorden is working to further lower costs and benefit from scale, in addition to expanding sales. Finland Finland generated operating revenues in 2014 of NOK million. Comparable figures are not available as the acquisition of the Finnish business was completed on December 19, The Finnish business experienced an above market growth driven by new municipal and I&C (Industrial & Commercial) contract wins. EBITDA in 2014 was NOK 25.9 million, in line with expectations. The Finnish operation experienced several contract wins and a strong production rate increase of the Group s own fleet by replacing local subcontractors. While this has reduced costs, it has also improved the Group s control over the quality of the service we deliver to our customers. Other As an administration cost center, this contains primarily costs related to Group items and IPO-related costs of NOK 26.7 million. The 2013 figures include the cost of NOK 2.2 million related to the HFT acquisition in Finland. Significant risks and uncertainties Risks and risk management RenoNorden is like any business associated with different risks. Risks are events that have a negative impact on the Group s operations and can arise from mismanagement or events outside of Reno- Norden s control. How risks are managed is central to the Group s ability to conduct business and its continued success. The risks to which the Group is exposed are broadly demarcated into three principal risk categories strategic, operational and financial. The risks that are judged to be of significance to the future success of RenoNorden s operations, performance and financial position are discussed below. These risks are described below in no particular order of priority and without claim of being exhaustive. We also include commentary on how these risks are managed. Strategic risks Strategic risks are primarily linked to business development and long term planning, as well as brand value. The most significant strategic risks relates to the Group s ability to sustain solid levels of growth and safeguard margins in a mature public-tender market, where environmental standards drive increasing levels of investment. To remain ahead of the competition requires us to have an experienced leadership team with deep sector and change management expertise to lead sector development. Other important strategic risks are the risk of the introduction of new laws and regulations that may negatively affect the operating situation for Reno- Norden. Also, deterioration in general economic factors or inflation, due to annual indexation of contracts, presents risks to the Group. Having a flexible operating model and a proactive and effective risk management program are critical success factors for the Group to adapt as needed. Strategic risks are assessed as part of the Board of Directors annual strategy work. Longer term planning is becoming an increasingly entrenched feature of our operating model. The executive management continually evaluates the medium term prospects for the Group, including regulatory developments, and, where necessary, adjustments to the medium-term plan are proactively made. Fast dissemination of appropriate information through RenoNorden s executive management structures and processes allows for an evolving plan of actions to achieve targeted development ambitions. This is followed up with the Board of Directors during the year. Operational risks Operational risks arise in the ordinary course of the Group s day-to-day business activities. A critical success factor is that the Group keeps indirect costs on a tight rein while operating the individual routes at optimal efficiency on a consistent basis. It is therefore important that employee RenoNorden 7

10 related risks are constantly managed for example staff retention, absenteeism, overtime and that satisfactory working conditions and good industrial relations are preserved. Also important is to ensure that the vehicle fleet is properly maintained and optimized and the level of vehicle breakdowns and damages minimized. Effective route planning is a core competency to achieve efficient routes, including lower fuel usage and overtime. If not actively managed, route efficiency is reduced and profitability impacted. This may also lead to failure to provide the services within the confines of the tender specifications, which increases exposure to fines from customers, options not being renewed or contract cancellation. Effective tendering is also a key capability. Incorrect assumptions or calculations in tender submissions may result in many years of operating losses and contract fines. Risks regarding compliance with laws and regulations, financial reporting and internal control are also operational risks. Additionally, the Group is exposed to risks from dependence on key suppliers and customers, IT systems and on key personnel. In case of insurable risks, RenoNorden s aim is to minimize the total cost of damages to the Group through risk- limiting initiatives in operations, additional health and safety training and partly by Group-wide insurance solutions, provided by large international insurers. The Board of Directors will review the adequacy of these arrangements annually. The organization structure is decentralized and therefore set up to effectively manage the daily operational risks. Route managers monitor the daily performance of their respective contracts with regional and country manager support and active Group oversight at least monthly. The Group is continuing to further build competency at the regional manager level to improve the continuous improvement culture. Reno Norden has recently invested in technology that is embedded in the truck fleet to give the respective department managers real-time tools to monitor daily performance and implement changes, where necessary. To support this, incentive structures are aligned around successful achievement of KPI targets throughout the Group. The operational risk management structures are in the process of being implemented but are not fully in place. This will continue in Executive management operates a pro-active risk management process which monitors risk factors, including compliance with laws and dependencies. Corrective actions are implemented, if necessary. The internal control framework is sound and on an improving trend. Risks are managed through systematic efforts to follow the Code of Conduct. The Code of Conduct was updated as part of the IPO and is being communicated throughout the Group to better entrench it into daily business activities. The improving corporate governance and control frameworks will continue to support risk management in the future. The Board of Directors evaluates the effectiveness of risk management and internal control annually. Financial risks The business is exposed to financial risks that can lead to fluctuations in earnings and cash flow resulting from changes in exchange rates and interest rates. Rising interest rates in the future will likely increase the Group s financing costs. RenoNorden actively manages this risk by entering into hedging arrangements designed to cap exposure for next 3 years. The Group is exposed to currency risk given that it operates across the Nordic region. Currency exposure as a result of transactions in other currencies is low given that the respective business units operate locally. The bank debt has been structured largely in proportion to the underlying earnings, and as such does not give rise to significant exposures for the Group. Conversion of the foreign currency balance sheets and income statements into NOK results in a translation exposure, but this does not give rise to an immediate cash effect. The Group operates in a capital-intensive industry that requires investment and other longterm commitments including leasing of vehicles. The Group is exposed to financing and liquidity risks and to credit and counterparty risks. Part of the credit risk is managed through use of credit insurance arrangements. Funding and liquidity risks are the risk of higher costs and limited financing opportunities when renewing loans and other credit arrangements and the risk of the inability to meet payment obligations as a result of insufficient liquidity. Management of financial risks is based on the Group s finance policy and the risk policies. The finance policy is evaluated and approved by the Board of Directors. For more information see note 3 on page 35 Financial Risk Management. RenoNorden 8

11 Corporate Social Responsibility RenoNorden s ambition is to pursue a sustainable business and is fully committed to conduct its business according to the highest professional, ethical and legal standards. For further information on CSR see pages Corporate Social Responsibility. Organization Executive management RenoNorden s executive management consists of Staffan Ebenfelt (President and CEO), Jon Kristian Flesvik (CFO), Fredrik Eldorhagen (Country Manager Norway), Peter Ekholm (Country Manager Sweden), Torben Lindholm (Country Manager Denmark), Jukka Koivisto (Country Manager Finland) and Andreas Westin (Head of Development). See page for further details on executive management. Board of Directors RenoNorden s Board of Directors consists of Erik Thorsen (Chairman), Penelope Kate Briant, Alexander Walsh, Niklas Nikita Sloutski and Charlotte G Hansson. The Annual General Meeting elects the Board of Directors. See Corporate Governance Section, pages for further details on the work of the Board of Directors and pages on the members of the Board of Directors. Audit committee The Audit Committee is a sub-committee of Reno Norden ASA s Board of Directors and its objective is to act as a preparatory body in connection with the Board of Directors supervisory roles with respect to financial reporting and the effectiveness of the Group s internal control system, and other tasks assigned to the Audit Committee in accordance with the provisions set forth in these instructions. Remuneration committee The Remuneration Committee is a sub-committee of RenoNorden ASA s Board of Directors and its objective is to act as a preparatory and advisory body in relation to the Group s remuneration policies, including for the executive management. The purpose of the remuneration committee is to ensure thorough and independent preparation of matters relating to compensation for the executive management. The majority of the committee members should be independent of the Group. For more details on the Remuneration Committee refer to Corporate Governance section on pages Remuneration principles The Board of Directors has established guidelines for the remuneration of members of the executive management. It is a policy of the Group to offer the executive management competitive remuneration based on current market standards, including a meaningful performance element based on Group and individual performance. For further details see note 6 on page 39. Proposal for long-term incentive program In order to strengthen the common interests between the executive management and other key employees and the shareholders post IPO, the Board of Directors has resolved, subject to approval by the General Meeting, to implement a long-term incentive program (LTIP) for its executive management and other key employees (as defined by the CEO and approved by the Board of Directors) by granting performance shares to such persons. The share award will be granted annually, and the Board of Directors will determine the maximum number of shares to be granted each year. The participants in the program will at each grant date receive performance shares, calculated on the basis of the market value of the shares at the time of grant and a purchase price equal to the nominal value of the shares (NOK 1). The Board of Directors will annually decide to whom shares will be granted and the number of shares to be granted to each participant. The first time of grant will be in the first half of The shares will vest three years after grant, subject to key performance criteria being met, and subject to the holder being an employee of the Group at the vesting date. Employees whose employment terminates prior to the vesting date due to death, disability or termination by the Group without cause, shall be entitled to a pro rata portion of the shares (subject to the key performance criteria being met). Vested shares will be delivered in the period starting on the day following the date of the Group s release of its annual results and for 15 business days thereafter. The Group may honor vested shares in the form of shares or by an equivalent amount in cash. See Corporate Governance Section, pages RenoNorden 9

12 Research and development The Group has no research and development, patents or licenses that are material to its business or profitability. Going concern The Board of Directors considers that the Group s financial standing is satisfactory. No post-balance sheet events that are likely to significantly affect the Group s financial position and results have been discovered. The financial statements have been presented on the assumption of going concern. The Board of Directors hereby affirms that the assumption is valid. Subsequent events RenoNorden A/S has on December 23, 2014 signed an agreement to acquire two contracts from a competitor in Denmark. The closing of the transaction was conducted January 28, RenoNorden A/S has taken over two contracts, both with effect from January 1, Contract 1 ends January 31, 2016 with 6 months prolonging options and contract 2 ends May 31, 2018 with 24 months prolonging options. In connection with the transaction, RenoNorden has taken over 31 employees and 23 vehicles. The purchase price is DKK 10 million with DKK 7.5 million upfront and DKK 2.5 million as deferred payment. RenoNorden has on March 5, 2015 acquired NTS Miljø AS in Norway, a subsidiary of NTS ASA. NTS Miljø AS operates one contract, serving several municipalities in northern Norway. The contract expires October 1, Estimated revenue for 2014 is NOK 12.3 million and estimated EBITDA is NOK 4.0 million. NTS Miljø AS has 13 employees and 8 vehicles. Signing and closing of the transaction was completed March 5, Purchase price for 100% of the shares is NOK 4.6 million. The transaction has accounting effect from January 1, Dividends RenoNorden intends paying annual dividends to shareholders, with an estimated average pay-out ratio of at least 60% of the Group s net profit. This will be prudently assessed and determined by the Board each year after taking into consideration market developments and the current and future financial position of the Group and its anticipated growth opportunities. Outlook RenoNorden estimate the long-term growth potential to be around 3-4% for the next 4-5 years. This market growth rate will vary over time depending on the timing and the size of tenders. The market is, as expected, showing signs of increased maturity and price pressure. RenoNorden is well positioned to handle this challenge due to its pan-nordic scale and it s specialist role. The Group improvement program is also an important requisite to be competitive in upcoming tenders and this is making good progress. RenoNorden has recently focused on the operational efficiency of contracts in Sweden and Norway and has initiated a number of common Group sourcing initiatives to further strengthen the competitive position and meet an expected maturing market with continued focus on price competition. Activities like fleet management, smart best practice solutions and further development of the Group s managers, through leadership programs, are ongoing. The Group s structural advantages and constant operational improvements will position RenoNorden well to win new contracts at competitive prices while managing to operate them at good margins. This is the key to sustainable growth. RenoNorden see room for consolidation in the market and we will consider strategic actions as an alternative to organic growth on the right terms. RenoNorden ASA (The parent company) The activities of RenoNorden ASA consist primarily of corporate and support functions for the entities in the Group. RenoNorden ASA has no revenues. Profit before tax for 2014 was NOK 58.8 million compared to NOK 2.2 million in Net financial items increased in 2014 to NOK 88.1 million up from NOK 7.4 million last year. The cash generated from operating activities was NOK 26.3 million in 2014 compared to NOK 1.1 million in Net cash used in financing activities was NOK 26.6 million in 2014 compared to NOK 5.4 million in The parent company had cash and cash equivalents of NOK 6.1 million at the end of RenoNorden 10

13 At the end of 2014, RenoNorden ASA (parent company) had no employees. Profit allocation The net profit for the year for RenoNorden ASA in 2014 was NOK 56.4 million, which has been allocated to dividend (see below) and to other equity. Total equity in RenoNorden ASA amounted to NOK million at December 31, Proposed dividend The Board of Directors proposes to the Annual General Meeting a total dividend payment of NOK 50.0 million for 2014 equal to NOK 1.84, per share, based on the number of shares outstanding at the end of The dividend corresponds to approximately 118 percent of the Group s net income for the period. The last day of trading in RenoNorden s shares, including the right to the dividend for 2014, is May 13, When considering the dividend proposal for 2014, the Board of Directors of Directors has taken into account the liquidity and the equity ratio position for the Group and the parent company. In the opinion of the Board of Directors, following allocations, RenoNorden ASA will have adequate financial strength and flexibility to provide sufficient support to operations in subsidiaries and to meet the Group s expansion plans. NOK 1, Profit/loss for the period 56,423 3,903 Proposed dividend per share (NOK) Share dividend 50,000 - Transfers to/from equity 6,423 3,903 Total allocations 56,423 3,903 The Board of Directors of RenoNorden ASA April 10, 2015 Erik Thorsen Chairman Penelope Kate Briant Board member Charlotte G Hansson Board member Alexander Walsh Board member Niklas Nikita Sloutski Board member RenoNorden 11

14 Corporate Social Responsibility Long-term competitiveness goes hand in hand with sustainability. RenoNorden must be a responsible business partner, a good corporate citizen, employer and a model of sustainable enterprise. RenoNorden is fully committed to conducting it s business in accordance with the highest professional, ethical and legal standards. RenoNorden s ambition is by all means to pursue a sustainable business well in line with the expectations of our stakeholders around the whole field of business ethics, anti-corruption, human rights, labor rights, equality and diversity as well as responsible use of resources. Through this approach, RenoNorden wishes, in line with the OECD Guidelines, to contribute to a sustainable development, economically, environmentally and socially. Quality, health and safety RenoNorden s ambition is to be at the forefront of environmental and socially responsible companies in the sector. RenoNorden shall strive to achieve a vision of zero harm to people, the environment and society, and work purposefully and systematically to reduce it s environmental impact. The Group s services shall always be subject to strict requirements in terms of quality, safety and impacts on personal health and the environment. To achieve this RenoNorden has developed a system of quality, environment and safety certificates that comply with all public and internal requirements. RenoNorden is currently certified according to EN ISO 9001: 2008 (Quality Standard), ISO 14001: 2004 (Environmental standard) and OHSAS 18001: 2007 (Safety standard). RenoNorden aims to have zero injuries among employees. Health and Safety is a corporate responsibility and the main KPI s are actively followed up by the local business units, but also reported centrally. RenoNorden had an absence rate due to sickness of 4.5% in The vehicle fleet is constantly maintained and all RenoNorden s staff is regularly trained by Health & Safety experts. For example, when on the road, RenoNorden s drivers should operate safely and follow traffic rules at all times. Each member of RenoNorden s collection team attends training in the Waste Management School where they are kept up-to-date on the industry s latest legal, professional health and safety guidelines. The Group is of the opinion that it operates materially in accordance with current Norwegian legislation on environmental, health and safety matters based on its ISO/OHSAS certification. The Group continuously works to proactively anticipate changes in such legislation. RenoNorden allocates significant resources to ensure operation in accordance with laws that are generally applicable as well as industry-specific standards. The Group is also of the opinion that it is in compliance with local regulations and legislation related to the working environment in each country. This applies to the physical, as well as the psychological, working environment. The Group strives to promote the employees health for the benefit of themselves and the Group. Environment The environmental focus of RenoNorden is stated as part of its value statement. We provide an essential service for environmental organizations, collecting waste for recycling, energy production, biogas production and soil conditioners. The Group work hard to minimize the environmental impact of its trucks, ensuring the fleet is properly maintained by investing in green fuel initiatives. Waste management has become a big issue. As natural resources become increasingly scarce and pressure to protect the environment increases, society is having to rethink it s rubbish. Sending it to a landfill site to be buried is no longer an acceptable solution to deal with waste. As part of this critical chain, RenoNorden makes every effort to work in a manner that is environmentally responsible. As an example, RenoNorden delivers thousands of tonnes of waste to recycling plants across the Nordic region each year, transporting waste in trucks that are regularly maintained. The Group has initiated a number of activities to reduce fossil fuel usage. During 2014, an increased number of the Group s transport vehicles used biofuels. RenoNorden 12

15 Employees RenoNorden had average number of 1,448 employees in All employees are highly valued and it is the Group s ambition that all employees should be treated fairly in terms of pay and working conditions. Gender balance and diversity The waste collection industry has traditionally had few female employees. The proportion of women in RenoNorden has been stable at around 4.4%. RenoNorden s Board of Directors consists of five members. There are three men and two women among the shareholder-elected members. During 2015, initiatives will be implemented to reduce gender discrimination. RenoNorden also has employees of many different nationalities working in providing services. The Group promotes diversity through non-discriminatory recruitment policies. Other initiatives to prevent discrimination will be implemented in A human rights policy will be established during Code of Conduct The mission of RenoNorden is to be the leading Nordic household waste collector. RenoNorden s business is based on trust, and for customers, employees, shareholders and other stakeholders to feel confident about RenoNorden, ethics and values is important throughout the Group. Responsibility for business ethics lies with the Board and the CEO, but is included as a natural part of all RenoNorden employee s responsibility and involves the efforts of all employees. Many areas supporting the monitoring and evaluation of the sustainability aspects are integrated into the daily operations of all employees and thus handled on a regular basis by the Group s executives. The Code of Conduct is to ensure employees and Board of Directors members comply with applicable laws and regulation and binding internal requirements in all their activities for RenoNorden. Also all employees and the Board of Directors members shall be loyal to and serve the best interest of Reno- Norden and act with integrity. In addition, the Group must practice good corporate citizenship and comply with laws and regulations wherever business is done. Relationships between employees must be built on mutual trust, respect and dignity. All employees shall avoid behavior that could be interpreted as discrimination or harassment. All employees and Board of Directors members shall be loyal to RenoNorden by avoiding any conflict of interest. The Code of Conduct applies to all RenoNorden employees and the Board of Directors and provides a framework for what RenoNorden considers acceptable and responsible conduct. Managers are responsible for providing appropriate support to ensure that their teams understand the requirements of the Code of Conduct and how they should be applied in practice. A number of training courses have been introduced to improve compliance with the Code of Conduct. Work will continue during 2015 to ensure that all employees fully understand the Code of Conduct and how it is applied in day-to-day work. RenoNorden 13

16 Anti corruption policy RenoNorden employees and Board of Directors members are not allowed to engage in any form of bribery or corruption. This requirement is based on anti-corruption legislation which all RenoNorden companies must adhere to, and applies to all of RenoNorden s activities. Individuals involved in acts of corruption may be exposed to civil and criminal liability. If in a challenging situation, employees are required to seek immediate advice from their superior about how to handle it in a legal manner. Such discussions are an important part of the Group s efforts to prevent corruption and bribery. The Board of Directors of RenoNorden ASA April 10, 2015 Erik Thorsen Chairman Penelope Kate Briant Board member Charlotte G Hansson Board member Alexander Walsh Board member Niklas Nikita Sloutski Board member RenoNorden 14

17 Corporate Governance Report RenoNorden ASA is a Norwegian public limited liability Company with registered office in Oslo and with operations in Norway, Sweden, Denmark and Finland. The Group s shares were listed on the Oslo Stock Exchange on December 16, This report is prepared by the Board of Directors and has been examined by the Company s auditor. No deviations from the Norwegian Corporate Governance Code are reported. RenoNorden is subject to reporting requirements for corporate governance under the Norwegian Accounting Act Sections 3-3b, and voluntarily complies with the Norwegian Code of Practice for Corporate Governance ( NCGB Code, refer to This corporate governance report follows the structure of the version of NCGB Code as published on October 30, RenoNorden considers good corporate governance essential for sound sustainable business activities and the key to building trustworthiness, value creation and access to capital. In order to achieve strong corporate governance, it is important that RenoNorden ensures credible and healthy business practices, reliable financial reporting and compliance with current legislation and regulations. RenoNorden has governance policies that set out principles for how business should be conducted that apply to all RenoNorden operating units ( Policy Documents ). This corporate governance report has been prepared by the Board of Directors, and will be presented at RenoNorden s Annual General Meeting on May 13, Implementation and reporting on Corporate Governance Adherence to the NCGB Code is evaluated by the Board of Directors annually. Deviations from the NCGB code are explained, where relevant, in this report. RenoNorden Corporate Governance Structure Auditors External Policy Documents Norwegian Accounting Act Oslo Børs rules Norwegian Code of Practice for Corporate Governance Owners through Annual General Meeting Board of Directors CEO Executive Management and staff units Business/Operations Nomination committee Remuneration committee Audit committee Internal Policy Documents Articles of Association Board of Directors instructions Policy and instructions Code of Conduct RenoNorden 15

18 RenoNorden s Policy Documents embody the Group s corporate governance principles and include policies and procedures with regard to health and safety, environment, employees, corporate conduct (anti-corruption manual, legal compliance and business ethics), as well as financial management and reporting. Compliance with the Policy Documents is mandatory for employees and others acting on the Group s behalf, and similar conduct and ethical standards are expected in partnerships, joint ventures and partially owned subsidiaries. The Policy Documents and the Code of Conduct can be found on the Group s website, including the values and ethics statement. The Group values are quality, respect, efficiency and environment. These values, together with the leadership principles and management structures ensure that the Policy Documents are enshrined in day-to-day business activities to achieve ethical and competitive business conduct within and on behalf of RenoNorden. 2. Business RenoNorden ASA s business objective is set out in the Articles of Association, article 3: The object of the Group is to operate transport services, waste management and all matters related thereto, as well as owning companies operating such activities. The Articles of Association are available on the Group s website, For further information regarding the business of RenoNorden, refer to the Board of Directors report, page 5. No deviations from the Code of Practice. 3. Equity and dividends In the opinion of the Board of Directors, RenoNorden s equity capital is appropriate to the Group s objectives, strategy and risk profile. Equity At December 31, 2014, share capital amounted to NOK 27.2 million, represented by 27,247,948 ordinary shares with a par value of NOK 1. The total number of shareholders at year-end was 595. RenoNorden s consolidated total equity was NOK million, which is equivalent to 29.6% of total assets. Dividends RenoNorden intends paying annual dividends to shareholders, with an estimated average pay-out ratio of at least 60% of the Group s net profit. This will be prudently assessed and determined by the Board each year after taking into consideration market developments and the current and future financial position of the Group and its anticipated growth opportunities. Increases in share capital At the General Meeting held on November 27, 2014, the Board of Directors was granted an authorization to increase the share capital of the Group by up to NOK 2,000,000, corresponding to less than 10% of the Group s share capital prior to the issuance of the new shares issued at the IPO. The authorization can be used at the discretion of the Board of Directors, including without limitations in connection with acquisitions and share-based incentive programs. The authorization is valid until the Group s Annual General Meeting in 2015, but not later than June 30, There may be deviation from the pre-emption rights of existing shareholders to subscribe to the share issues relevant to this authorization pursuant to Section 10-4 of the Norwegian Public Limited Companies Act. The authorization includes potential share capital increases against contribution in kind, but does not include share capital increases in connection with mergers. If authorization of capital increases is to cover additional purposes it needs a separate approval by the General Meeting. This is in line with Corporate Governance principles of limitation on authorization. Authorization to acquire treasury shares At the General Meeting held on November 27, 2014, the Board of Directors was granted an authorization to repurchase the Group s own shares up to a maximum total par value of NOK 2,000,000, corresponding to less than 10% of the Group s share capital prior to the issuance of the new shares issued at the IPO. The Board of Directors is authorized to acquire and sell shares at its discretion, but not at prices higher than NOK 80 or lower than NOK 20. The authorization is valid until the Group s Annual General Meeting in 2015, but not later than June 30, 2015 in line with Corporate Governance principles of limitation on authorization. The Board of Directors may obtain authorization from the General Meeting of shareholders to buy back RenoNorden s shares in the market. In such RenoNorden 16

19 cases, the Board of Directors will normally request that the shares are acquired in the open market, and that the authority lasts no longer than until the next General Meeting. No deviations from the Code of Practice. 4. Equal treatment of shareholders and transactions with close associates RenoNorden ASA has one share class. All shareholders shall be treated equally, and voting rights are based on the principle of one share one vote. The Board of Directors shall ensure equal treatment for all shareholders including minority shareholders. Any authorization to increase the share capital of the Group with any deviation of shareholder rights will be communicated and explained thoroughly in a stock market release and, if needed, presented to the General Meeting. Transactions involving own shares will be performed on the stock exchange. Shareholders who are registered with the Norwegian Central Securities Depository (VPS) may vote in person or by proxy. Invitations are sent to the shareholders or to the custodian where the shareholder s securities account is held. Any transactions in the shares by the Group will take place at market price. In the event of limited liquidity in the share, the equal treatment of shareholders will be met in alternative ways. The members of the Board of Directors shall act independently of special interests. Pursuant to the Policy Documents and the Board of Directors manual, the members of the Board of Directors and the executive management shall promptly notify the Board of Directors in writing if they have any material interest in any transaction or potential transaction entered into by the Group. All transactions with related parties are conducted in accordance with the arm s length principle. For information related to party transactions, please see note 22 in the 2014 consolidated financial statements. No deviations from the Code of Practice. 5. Freely negotiable shares RenoNorden shares are fully transferable and freely negotiable. The Articles of Association do not provide for any restrictions on the ability to vote, the transfer of shares or a right of first refusal for the Group. Share transfers are not subject to approval by the Board of Directors. No deviations from the Code of Practice. 6. General meetings The General Meeting is the shareholders forum and the ultimate governing body of the Group through which shareholders exercise their voting rights in accordance with the number of shares held. The Articles of Association do not impede the shareholders rights as provided by the Public Limited Companies Act. The Board of Directors sets the agenda for the General Meeting. Any shareholder may, by written and justified notification to the Board of Directors not later than five days before the due date for submission of the summons, request items to be included in the agenda for the General Meeting. Notice of the General Meeting will be given at least 21 days before the meeting. Documentation for the General Meeting will be sufficiently detailed and comprehensive for the shareholders to assess, discuss and vote on the matters presented to the General Meeting. Matters to be resolved at the AGM will typically include: Adoption of the Annual Report and the consolidated financial statements Dividend Election of the Board of Directors, and where applicable the auditors Determination of fees for the Board of Directors Guidelines and programs for remuneration of executive management and senior executives The deadline for giving notice of attendance is set at five days before the General Meeting. Participation at the General Meeting is made possible by registering voting in advance, electronically or in writing. Shares registered in a nominee account must be re-registered in the Norwegian Central Securities Depository (VPS) and be registered in the VPS on the fifth working day before the General Meeting in order to obtain voting rights. Shareholders who are unable to attend in person may vote by proxy. RenoNorden will nominate a person who will be available to vote on behalf of shareholders as their proxy. The General Meeting votes for each candidate nominated for election to the Board of Directors and the Nomination Committee. To the extent possible, the form of proxy will facilitate separate voting instructions for each matter to be considered by the meeting and for each of the candidates nominated RenoNorden 17

20 for election. It is possible to vote electronically in advance. An external counsel or the Chairman of the Board of Directors will chair the General Meeting. The CEO and the CFO will represent the executive management. The respective chairs of the Board committees may be present to explain the separate committees proposals. The Group s external auditor will attend the General Meeting and present conclusions in the auditor s report. No deviations from the Code of Practice. The RenoNorden 2015 Annual General Meeting will take place on May 13, 2015 For further information of the General Meeting please refer to RenoNorden s website at: 7. Nomination committee Pursuant to the Articles of Association, RenoNorden has a Nomination Committee comprising two or three shareholder representatives. The current members of the Nomination Committee are Seamus Philip Fitzpatrick (Chairman) and Ian Lambert. The Nomination Committee is responsible for nominating the shareholder-elected Board of Directors members and making recommendations regarding their remuneration. The General Meeting may establish guidelines for the Nomination Committee and shall resolve on the remuneration to its members. The Group will cover reasonable costs incurred by the Nomination Committee members directly in connection with the fulfillment of their obligations. The Nomination Committee shall: (i) (ii) Nominate candidates for the election of members to and the Chairman of the Board of Directors and Propose remuneration for the Board of Directors According to its mandate, the Nomination Committee shall be receptive to external views and shall ensure that any deadlines for proposals and information regarding members for the Nomination Committee and the Board of Directors are published well in advance on the Group s website. As guidance, proposals can normally be submitted up to 21 days before the General Meeting. In carrying out its duties, the Nomination Committee should actively maintain contact with the shareholder community and should ensure that its recommendations are anchored with major shareholders. The members of the Nomination Committee are independent of Reno Norden s CEO and other executive management. No deviations from the Code of Practice. 8. The Board of Directors composition and independence RenoNorden s Board of Directors shall consist of three to seven members, according to the Group s Articles of Association. The number of Board of Directors members has been five, consisting of two women and three men. Therefore, the Public Limited Companies Act requirement for 40% representation of each gender is fulfilled. The Nomination Committee aims to achieve a composition whereby the members compliment each other professionally and the Board of Directors is able to function as a single corporate body and represent all shareholders collectively. The composition of the Board of Directors is in compliance with the independence requirements of the Corporate Governance Code meaning that (i) the majority of the shareholder-elected members of the Board of Directors is independent of the Group s executive management and material business contacts, (ii) at least two of the shareholder-elected Board Members are independent of the Group s main shareholders (shareholders holding more than 10% of the shares in the Group), and (iii) no members of the Group s executive management serve on the Board of Directors. As of December 31, 2014, CapVest and Accent each held more than 10% of the shares in the Group. All members of Board of Directors are elected for one year at a time. The General Meeting elects the Chairman of the Board of Directors. No members of the Board of Directors should be elected for more than two years. All current members have a statistical attendance at Board of Directors and Committee meetings of more than 90%. If possible, members of the Board of Directors should hold shares in RenoNorden. Neither the Group s external auditor, nor any member of the RenoNorden 18

21 executive management, is to be a member of the Board of Directors. The CEO and the CFO attend all Board of Directors meetings, and the auditor attends Board of Directors meetings in connection with some of the quarterly and the annual financial statements. For more information on the respective experience, competences and shareholdings of the Board of Directors refer to pages No deviations from the Code of Practice. 9. The work of the Board of Directors 1) The Board of Directors is responsible for the management of the Group, including the appointment of a CEO to assume the daily management of Group affairs. The members of the Board of Directors shall discharge their duties in a loyal manner, attending to the interests of the Group, and ensure that its activities are organized in a prudent manner. The Board shall adopt plans, budgets and guidelines applicable to the activities of the Group. The Board of Directors shall keep itself informed of the current financial position of the Group, and has a duty to monitor that the Group s corporate accounts and management of operations and assets are subject to satisfactory risk management and controls. The Board of Directors develops an annual plan for its work, clearly setting out strategic, financial, operational and organizational issues for consideration. In addition to adhering to its plan, the Board of Directors discusses upcoming issues, which require the Board of Directors involvement. The Board of Directors has formed two sub-committees: an Audit Committee, as required by the Public Limited Company Act, and a Remuneration Committee. The committees undertake preparatory discussions and report their recommendations to the Board of Directors, but do not adopt any resolutions. In 2014, the Audit Committee focused on the Group s financial reporting and internal control functions, whereas the Remuneration Committee had a focus on Group compensation guidelines, annual salary increases, executive compensation including bonus plans and the introduction of a long-term incentive plan (LTIP). The Board shall annually evaluate its performance over the preceding year, including the performance of the sub-committees and the performance of the individual Board members. In order for the evaluation to be effective, the Board shall set objectives, on both a collective and individual level, against which their performance can be measured. The Chairman will perform the evaluation annually and report the results to the Nomination Committee. To maintain the Board of Directors members independence, they may not assume business relations or undertake special tasks for the Group in addition to their directorship, without promptly informing the full Board of Directors, and any remuneration for such tasks requires the Board of Directors approval. In light of the Board of Directors members status as primary insiders of RenoNorden, they follow the Group s instruction for primary insiders. The Board of Directors Rules of Procedure clarify the responsibilities of the Chairman of the Board of Directors and the CEO, the Board of Directors obligations towards the General Meeting, and the quorum and voting procedures in Board of Directors meetings. The Board of Directors manual further sets out specific mandates for the Audit and Remuneration Committees, respectively. The Board of Directors established a Board of Directors manual in November The mandate for the Remuneration and Audit Committees was also approved in November No deviations from the Code of Practice. Board of Directors Committees and Dependence Nationality Board member Audit committee Remuneration committee Independent Shareholding, no. of shares Erik Thorsen, Chairman Norwegian Chairman Chairman Yes 0 Penelope Kate Briant British x Chairman No 42,000 2) Charlotte G Hansson Swedish x x Yes 0 Niklas Nikita Sloutski Swedish x x x No 0 Alexander Walsh British x No 18,000 1) As the Group was listed in December 2014 the number of meetings during 2015 will be described in the 2015 Annual Report. 2) Through Drayton 2000, a trust in which Penelope Kate Briant is beneficiary. RenoNorden 19

22 10. Risk management and internal control Internal control over financial reporting The Board of Directors is responsible for internal control and risk management in accordance with the Norwegian Companies Act and the Norwegian Code of Practice for Corporate Governance. Below is the Board of Director s report on internal control and risk management over financial reporting. The description of RenoNorden s system for internal control and risk management with regards to financial reporting is based on the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The framework comprises five components; the control environment, risk assessment, control activities, information and communication, and monitoring, and 17 related fundamental principles. The description below is limited to internal control and risk management over financial reporting. Internal control over financial reporting aims to provide reasonable assurance of the reliability of external financial reporting in the form of interim reports and annual reports, and to ensure that external financial reporting is prepared in accordance with laws, applicable accounting standards and other requirements on listed companies. Control environment Internal control over financial reporting is based on the overall control environment. The control environment is the set of standards, processes, and structures that provide the basis for carrying out internal control across the Group. The Board of Directors and executive management establish the tone at the top regarding the importance of internal control including expected standards of conduct. This involves the integrity and ethical values, the organizational structure and assignment of authority and responsibility, decision-making paths, performance measures and incentives and rewards to drive accountability. This is communicated in the form of internal steering documents such as Articles of Association, Procedures for the Board, Instruction for the CEO, Instructions regarding financial reporting, Code of Conduct, other policies, instructions and manuals. The control environment is also based on laws and external regulations. The Board has established a procedure for its work and the work of the Audit Committee and Remuneration Committee. The main task of the Audit Committee is to monitor RenoNorden s financial reporting, to secure that principles adopted for financial reporting, internal control and risk management are observed and effective, and to secure the quality of the external reporting and information disclosures. The activities of the Audit Committee will be described in the 2015 Annual Report as the Group was listed in December Responsibility for implementing the Board s steering documents regarding internal control and risk management over financial reporting, maintaining an effective control environment as well as the day-to-day work on internal control and risk management over financial reporting is delegated to the CEO. This responsibility is in turn delegated to managers within their specific areas of responsibility at various levels in the Group. Responsibility and authority are defined by the Board of Directors, among other things, in steering documents such as Instructions for the CEO regarding resolutions that are subject to decision by the Board or the General Meeting of shareholders, Authority to Sign for the Group, and Delegated Authorities. The Board of Directors also approves, among other things, Instructions regarding Financial Reporting, Code of Conduct, Information Policy, Insider Policy, Information Security Policy and Finance Policy. The CEO approves the Finance and Accounting Manual, which is available to all personnel in finance and accounting. Based on the Board of Director s steering documents, the CEO, the CFO and other managers establish instructions and manuals to be implemented within their specific areas of responsibility. Internal steering documents are reviewed and updated regularly with reference to e.g. changes in legislation, accounting standards, listing requirements and internal risk assessment, and were last updated prior to the IPO. Efforts to streamline and improve the financial reporting processes, as well as the process for preparation of the external financial reports was initiated in 2014 and will be continued during No deviations from the Code of Practice. 11. Remuneration of the Board of Directors The remuneration of the Board of Directors is decided by the General Meeting based on the Nomination Committee s proposal. The committee considers the level of responsibility, complexity and time required, RenoNorden 20

23 as well as the required expertise, for the Board of Directors members. The remuneration is not linked to the Group s performance and no stock options have been granted. Proposals for annual adjustments of the remuneration of the Board of Directors are based on considerations to ensure that Reno Norden remains attractive and competitive. No Board of Directors members shall carry out any specific tasks or commissions for the Group in addition to their directorship during the year and no other remuneration should be paid to any Board of Director member in addition to the ordinary Board of Directors remuneration. If any additional remuneration is paid, the full Board of Directors must be informed and approve the amounts. Separate remuneration is stipulated for the Chairman of the Board of Directors and members of committees under the Board of Directors. At an extraordinary Annual Meeting on November 27, 2014 the following annual remuneration for the Board of Directors was resolved for the period until the Annual General Meeting 2016: The Chairman * NOK 550,000/year Board members NOK 250,000/year The audit Committee Chairman NOK 100,000/year Audit Committee members NOK 50,000/year The Remuneration Committee Chairman NOK 50,000/year Members of the Remuneration Committee NOK 25,000/year No remuneration was provided for the Board of Directors for the period up and until November 27, * Additional remuneration of up to 50% of the fixed fee for extraordinary work is to be approved by the Annual General Meeting. Reasonable travel and accommodation expenses directly incurred are reimbursed in accordance with the Group s policy. For further information, reference is made to note 6 on page 39 in the consolidated financial statements. No deviations from the Code of Practice. Audit committee The Audit Committee is a sub-committee of Reno Norden ASA s Board of Directors. The Board of Directors determines the instructions for and composition of the Audit Committee. The Committees objective is to act as a preparatory body in connection with the Board of Directors supervisory roles with respect to financial reporting and the effectiveness of the Group s internal control system, and other tasks assigned to the Audit Committee in accordance with the provisions set forth in these instructions. The Audit Committee supports the Board of Directors in the administration and exercise of its responsibility for supervision in accordance with applicable provisions of the Norwegian Public Limited Companies Act and Norwegian securities legislation, as well as applicable listing standards of Oslo Børs. In particular, the Audit Committee shall: (i) Monitor the financial reporting process, including review of implementation of accounting principles and policies (ii) Monitor the effectiveness of the Group s internal control, internal audit and risk management system (iii) Monitor the statutory audit of the annual and consolidated accounts (iv) Review and monitor the independent auditor s qualifications and independence (v) Review and monitor the performance of the Group s internal accounting function and external auditor (vi) Monitor the Group s compliance with applicable legal and regulatory requirements (vii) Monitor the Group s compliance with its governance policies (viii) Review and discuss with the relevant members of the executive management of the Group and the external auditor the financial statements produced by the various companies in the Group, with focus upon accounting and consolidation principles (ix) Discuss with the relevant members of the management of the Group the status of pending litigation, taxation matters and other areas of review in the legal and compliance area as may be appropriate in relation to financial issues (x) Arrange an annual review to check that the proper authorization process has been observed in the Group RenoNorden 21

24 (xi) If such authority has been delegated to the Audit Committee by the Group s General Meeting or the Board of Directors, determine the external auditor s remuneration (xii) Make recommendations in connection with the General Meeting s appointment of external auditor (xiii) Report Audit Committee activities and actions to the Board of Directors, cf. Section 5 (xiv) Review and reassess the adequacy of the Audit Committee guidelines annually and recommend any proposed changes to the Board of Directors for approval The Audit Committee shall consist of at least two members of the Board of Directors. The Board of Directors shall appoint the members and the chairman of the audit committee for a one-year term. The composition of the Audit Committee shall be in compliance with the Norwegian Public Limited Companies Act. The members of the Audit Committee shall be independent of the Group s executive management and at least one member shall have competence in accounting or auditing. Further, the entire Board shall not act as the Audit Committee. When appointing members, the Board of Directors shall take into consideration whether the person concerned has the necessary knowledge of basic internal control, finance and accounting practices. The Audit Committee shall have full access to all the books, records and personnel of the Group, as well as the Group s external auditor. The Audit Committee may also retain independent counsel, accountants or others to advise the Audit Committee or assist in the undertaking of its duties. It is not the responsibility of the Audit Committee to plan or conduct audits or to determine whether the Group or the Group s financial statements are complete, accurate, or in accordance with IFRS. The Audit Committee will meet as often as it deems necessary, but normally five times every year. The Audit Committee will draw up an annual meeting plan. Interim meetings may be called if a member of the Audit Committee requires it. The Group s CEO and members of the Board of Directors are entitled to participate in the Audit Committee s meetings. The Group s CFO will be the executive management s main representative in relation to the Audit Committee and will participate in Audit Committee meetings, unless instructed otherwise by the committee. Meeting agendas shall be prepared and provided in advance to members, along with appropriate briefing materials. Minutes of all Audit Committee meetings shall be prepared. The Audit Committee s primary responsibilities also include overseeing the external auditor relationship by discussing with the auditor the nature and rigor of the audit process, receiving and reviewing audit and other reports including responses from the management related thereto, and providing the auditor full access to the Audit Committee, with or without the management of the Group present, to report on any and all appropriate matters. The current members of the Audit Committee are Penelope Kate Briant (Chairman), Niklas Nikita Sloutski and Charlotte G. Hansson. No deviations from the Code of Practice. Remuneration committee The Remuneration Committee is a sub-committee of RenoNorden ASA s Board of Directors. Its objective is to act as a preparatory and advisory body in relation to issues associated with the Group s compensation principles and programs, especially for executive management. The Board of Directors determines the instructions for and the composition of the Remuneration Committee. The Board of Directors shall appoint the members and the Chairman of the Remuneration Committee for a one-year term. The Remuneration Committee shall consist of at least two members of the Board of Directors. The members of the Remuneration Committee shall be independent of the Group s executive management. Further, the entire Board shall not act as the Remuneration Committee. The Remuneration Committee shall have the authority to review any Group matter within the committee s scope of responsibilities. In discharging its responsibilities, the Remuneration Committee shall have full access to the records and personnel of the Group, and shall have the opportunity to seek advice and recommendations from sources outside of the Group, if deemed necessary. The Remuneration Committee will meet as often as it considers necessary, but normally two to three times every year. The Remuneration Committee will draw up an annual meeting plan. Interim meetings may be called if a member of the Remu- RenoNorden 22

25 neration Committee requires it. The Remuneration Committee s primary responsibilities in providing assistance and facilitating the decision making of the Board of Directors include: (i) Assessing and making a recommendation to the Board of Directors for the remuneration to the CEO (ii) Conducting a formal evaluation of the executive management annually, applying firmly established performance objectives tied to: - impact on business performance; - ability to select and develop the right people for the management team; - scope of influence on outcomes; - fulfillment of shareholders expectations; - vision and strategy for the Group s future; - succession plan; and - effectiveness in managing external relationships (iii) Assessing the Group s compensation and benefits strategy for its executive management by an annual review of the organization s overall compensation plan (or practices). This includes monitoring the effectiveness of the design, performance measures and award opportunities offered by the Group s executive management compensation plans (iv) Overseeing the CEO s efforts to identify and develop potential successors for key executive management (v) Preparing matters relating to other material employment issues (vi) Reviewing and reassessing the adequacy of these instructions annually and recommending any proposed changes to the Board of Directors for approval, together with the other documentation for the General Meeting The current members of the Remuneration Committee are Erik Thorsen (Chairman) and Niklas Nikita Sloutski. No deviations from the Code of Practice. 12. Remuneration of executive management RenoNorden has guidelines for remuneration of executive management. These guidelines follow Norwegian law and are communicated to the General Meeting, and set out the main principles behind salaries and other compensatory elements. Performance-related remuneration of executive management is linked to the financial performance of the Group, and the individual s contribution thereto. In general, the guidelines ensure alignment of financial interests between the shareholders and the executive management. Examples of performance criteria are under the LTIP where targets are based on EPS-growth over a three-year period. The Group has not granted any loans, guarantees or other commitments to any of its Board Members or to any member of the management. The CEO s remuneration terms are reviewed and decided annually by the Board of Directors. The remuneration decision takes into consideration the overall performance of the CEO and the Group, and the market development for CEO remuneration in companies of similar complexity, size and industries. The CEO decides the remuneration for other members of executive management. The structure of the executive management incentive system is determined by the Board of Directors and presented as a separate document to the General Meeting. The incentive system consists of base salary, annual bonus agreement, pension, long-term incentive program and other minor benefits. There is a cap of 7/12th of annual salary on the variable salary for the executive management. More information about management remuneration is available in the financial statements, notes 6 page 39. No deviations from the Code of Practice. 13. Information and communication The Board of Directors has approved written rules on the Group s communication and financial reporting. All communication with shareholders shall be on an equal treatment basis and in compliance with the provisions of applicable laws and regulation. RenoNorden shall continuously provide its shareholders, Oslo Børs and the financial markets in general with timely and accurate information about RenoNorden and its operations. This information is simultaneously presented on RenoNorden s website A financial calendar is also found on the website. The Communication activities support the business objectives of RenoNorden to build strong and lasting relations with key stakeholders. RenoNorden 23

26 When performed with excellence, communication builds RenoNorden s success by helping to enhance the reputation of RenoNorden by spreading knowledge, understanding and confidence, which mobilize RenoNorden s supporters and instigate respect amongst competitors. RenoNorden s communication activities will be characterized by the following basic principles that apply because RenoNorden s shares are listed on Oslo Børs: Transparency, honesty, consistency and timing. The Group s Instruction for handling of inside information sets out guidelines for information disclosure. Relevant information about RenoNorden shall be given in the form of annual reports, interim reports, press releases and notices to the stock exchange. All disclosure, communication and reporting shall be in compliance with the applicable laws and regulations from time to time, in particular the Norwegian Securities Trading Act, the Norwegian Accounting Act and Oslo Børs continuing obligations for listed companies. Unless exceptions apply and are invoked, RenoNorden shall promptly disclose all inside information (as defined by the Securities Trading Act). All financial and other Investor Relations information shall be published in English. No deviations from the Code of Practice. 14. Take-overs In the event of a take-over process, the Board of Directors shall abide by the principles of equal treatment of the shareholders and limit the disturbance to the on-going business. The Board of Directors will have a particular duty to secure that all stakeholders receive information in due course so that the shareholders can make their own opinion on the potential offer. The Board of Directors will also not seek to hinder or obstruct any takeover bid for the Group s operations or shares unless there are particular reasons for doing so. If a bid is made for the Group s shares, the Board of Directors should make a written statement issued as a stock market release recommending or not recommending the transaction. In this statement it should be clear if the assessment from the Board of Directors is unanimous or not. An independent valuation should be present and published with the statement. The Board of Directors must be aware of the particular duty it has for ensuring that the values and interests of the shareholders are protected. The General Meeting will ultimately decide on transactions involving a potential divestment of the Group. No deviations from the Code of Practice. 15. Audit The external auditor presents an annual audit plan, describing the auditor s main task for the audit for the year ahead including an understanding of the industry and significant risks, as well as the audit approach to be applied. The auditor participates in Audit Committee meetings, and Board meetings when discussing the quarterly and financial statements or otherwise requested. In the meetings, the auditor will review material changes in the Group s accounting policies, assess material accounting estimates and any other material matters on which the auditor and management may disagree, and identify weaknesses in, and suggest improvements to the Group s internal controls. On an annual basis the auditor shall also review the Group s internal-control systems together with the Audit Committee. In this meeting any weaknesses should be presented as well as improvement activities. During 2014, the auditor participated in one board meeting discussion with the Audit Committee without executive management being present, and for 2015 such time is scheduled with the full Board of Directors. The Group has effective guidelines for the ability of the auditor to perform non-audit services for the Group upon approval by the Audit Committee. The Group informs the General Meeting about the auditor s fees for audit and non-audit services. The Board of Directors regularly assesses the quality and efficiency of the work of the auditor. No deviations from the Code of Practice. RenoNorden 24

27 Special items EBITDA effect Profit before tax effect NOK 1, Write-down of capitalized origination fees related to old bank facility 24,627 Management fees 3,792 4,044 3,792 4,044 IPO costs 26,674 26,674 Total special items 30,466 4,044 55,093 4,044 RenoNorden 25

28 Group Consolidated Statement of Comprehensive Income NOK 1,000 Note Operating revenues and expenses Revenue 1,555,161 1,266,491 Other operating revenue 24,144 1,832 Operating revenue 5 1,579,306 1,268,323 Cost of sales 158,610 77,705 Employee benefit expense 6 804, ,336 Depreciation and amortization 11, ,030 85,571 Other operating expenses 7 376, ,296 Total operating expenses 1,446,201 1,130,908 Operating profit/loss 133, ,415 Financial items Finance income 8,463 2,956 Finance costs 106,402 76,801 Net Financial items 8 97,939 75,732 Profit/loss before taxes 35,166 61,683 Income tax expense 9 7,320 12,183 Profit/loss for the period 42,486 49,499 Other comprehensive income Items that may be subsequently reclassified to profit or loss Currency translation differences 11,996 1,001 Total comprehensive income/loss for the period 54,482 48,498 Earnings per share Basic earnings per share from profit for the year (NOK) Diluted earnings per share from profit for the year (NOK) The accompanying notes are an integral part of the consolidated financial statements. RenoNorden 26

29 Group Consolidated Balance Sheet NOK 1,000 Note Dec 31, 2014 Dec 31, 2013 Assets Non-current assets Goodwill 11 1,014,223 1,011,502 Other intangibles 11 12,246 12,986 Equipment , ,296 Investments in shares Total non-current assets 1,755,634 1,699,818 Current assets Inventory 7,157 5,651 Accounts receivable 213, ,007 Other receivables 44,015 39,623 Cash and cash equivalents , ,600 Total current assets 484, ,881 Total assets 2,240,008 2,236,699 The accompanying notes are an integral part of the consolidated financial statements. RenoNorden 27

30 EQUITY AND LIABILITIES Note Dec 31, 2014 Dec 31, 2013 Equity Share capital 27, Treasury shares - 1 Share premium SoCE 501,445 3,875 Retained earnings 134, ,888 Total equity 663, ,961 Non-current liabilities Deferred tax 9 33,117 49,626 Non-current finance lease obligation , ,965 Non-current liabilities to financial institutions , ,184 Total non-current liabilities 1,130,587 1,150,774 Current liabilities Shareholder loan 22-1,007,482 Current liabilities to financial institutions 17 89, ,707 Current finance lease obligation 16 58,166 61,948 Accounts payable 95,221 77,851 Taxes payable 9 8,320 7,077 Accrued public taxes 38,536 45,962 Other current liabilities , ,858 Total current liabilities 446,286 1,494,885 Total liabilities 1,576,873 2,645,659 Total equity and liabilities 2,240,008 2,236,699 The accompanying notes are an integral part of the consolidated financial statements. The Board of Directors of RenoNorden ASA April 10, 2015 Erik Thorsen Chairman Penelope Kate Briant Board member Charlotte G Hansson Board member Alexander Walsh Board member Niklas Nikita Sloutski Board member RenoNorden 28

31 Group Consolidated Statement of Cash Flows NOK 1,000 Note Cash flows from operating activities Profit before income taxes 35,166 61,683 Taxes paid in the period 9,512 4,576 Gain/loss from sale of equipment Depreciation and amortization 107,030 85,571 Fair value changes in derivatives 374 2,688 Change in inventory 1,506 1,110 Change in accounts receivable 7,553 6,749 Change in accounts payable 17,370 17,464 Change in other receivables, other current liabilities, and non-cash items 31,184 40,445 Net cash generated from operating activities 172, ,703 Cash flows from investing activities Proceeds from sale of equipment 9,726 9,794 Purchase of equipment 40,968 24,004 Purchase of Finnish acquisition, net of cash acquired 20 3,156 51,900 Net cash used in investing activities 28,087 66,110 Cash flows from financing activities Proceeds from bank borrowings related to Finish acquisition - 86,329 Proceeds from non-current liabilities to financial institutions ,038 8,114 Repayments of non-current liabilities to financial institutions ,412 90,239 Net increase/decrease in current liabilities to financial institutions 47,601 41,265 Proceeds from shareholder loans 11,915 - Repayment of shareholder loans ,948 - Repayment of finance lease obligation 22 49,619 41,123 Proceeds from sale of treasury shares Purchases of treasury shares Proceeds from issuance of equity (private placement) Proceeds from issuance of equity (public offering) ,850 Net cash used in financing activities 209,414 4,346 Exchange losses on cash and cash equivalents Net change in cash and cash equivalents 65, ,939 Cash and cash equivalents at the beginning of the period 285, ,662 Cash and cash equivalents at the end of the year 219, ,601 The accompanying notes are an integral part of the consolidated financial statements. RenoNorden 29

32 Group Consolidated Statement of Changes in Equity NOK 1,000 Note Share capital Share premium Retained earnings Treasury shares Total shareholders equity Opening shareholders Equity , , ,390 Repurchase of own shares Profit for the year 49,499 49,499 Other comprehensive income for the period 1,001 1,001 Shareholder's equity Dec 31, , , ,961 Opening shareholders Equity , , ,961 Proceeds from shares issued (private placement) Repurchase of own shares Sale of treasury shares Cancellation of preference shares , , ,399 Share capital increase 22 20,458 20,458 - Proceeds from shares issued (public offering) 22 6, , ,850 Profit/loss for the period 42,486 42,486 Other comprehensive income/loss for the period 11,996 11,996 Shareholders' equity Dec 31, , , , ,135 See note 4 Number of shares outstanding, equity reconciliation and shareholders in RenoNorden ASA for further information. The accompanying notes are an integral part of the consolidated financial statements. RenoNorden 30

33 RenoNorden Group Notes Note 1. General information RenoNorden ASA ( the Company ) and its subsidiaries (together, the Group ), also known collectively as the RenoNorden Group, develop and operate waste disposal services for municipalities and inter-municipal waste companies in the Nordic region. The Group specialises in the collection of household waste and operates across Sweden, Denmark, Finland and Norway. The Company is a public limited liability Company and was listed on Oslo Stock Exchange on 16 December The Company is incorporated and domiciled in Norway. The address of its registered office is Lindebergvegen 3, 2016 Frogner, Norway. The Board of Directors of RenoNorden ASA approved the Dec 31, 2014 consolidated financial statements on April 10, Note 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements of RenoNorden ASA have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) as required for financial years beginning January 1, The consolidated financial statements have been prepared under the historical cost convention, as modified by any derivative instruments at fair value through profit or loss. The Consolidated Financial Statements are prepared using uniform accounting policies for similar transactions and events under similar conditions for all reporting periods presented. Management believes that the Group s cash flow from operations and its current and future credit facilities will continue to provide the cash necessary to satisfy the Group s working capital requirements and capital expenditures, as well as to make all scheduled long-term debt payments and satisfy the Group s other on-going financial commitments. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note Basis of consolidation (a) Subsidiaries Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement (note 2.6). 2.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. 2.4 Foreign currency translation a) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity oper- RenoNorden 31

34 ates ( the functional currency ). The consolidated financial statements are presented in Norwegian Kroner (NOK), which is the Group s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. (c) Group companies The results and balances of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) income and expenses for each income statement are translated at average exchange rates and (iii) all resulting exchange differences are recognized in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. However, the Company has adopted the exemption not apply IAS 21 The Effects of Changes in Foreign Exchange Rates retrospectively to goodwill arising in business combinations that occurred before the date of transition to IFRS. This goodwill is consequently reflected as assets and liabilities in NOK. Exchange differences arising are recognized in other comprehensive income. 2.5 Equipment Equipment consists mainly of waste disposal trucks/units held under finance leases. In addition equipment consists of containers and other transportation equipment plus furniture and fittings and IT equipment for office premises. Equipment is stated at historical cost less depreciation. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Depreciation on other equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Equipment and machinery* Fixtures and fittings *Includes waste disposal trucks 3-15 years 3-15 years 7-12 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each annual reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (note 2.7). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized within Other operating expenses in the consolidated statement of comprehensive income. 2.6 Intangible assets (a) Goodwill For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually at year-end or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the relevant unit including goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment of goodwill is recognized immediately as an expense and is not subsequently reversed. Goodwill that was recognized prior to the IFRS conversion date of January 1, 2011 was allocated to the respective CGU s using the presentation currency (NOK). This goodwill is subsequently measured and tested for impairment based on this currency. (b) Other intangible assets Patents, technology and customer contracts are shown at historical cost. Patents, technology and customer contracts acquired in a business combination are recognized at fair value at the acquisition date. Patents, technology and customer contracts have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost patents, technology and customer contracts over their estimated useful lives of 3 years, 10 years, and the time period of the individual customer contracts, respectively. 2.7 Impairment of non-financial assets Intangible assets that have an indefinite useful life or intangible assets not ready for use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets RenoNorden 32

35 (other than goodwill) are reviewed for possible reversal at each reporting date. 2.8 Inventory Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. 2.9 Accounts receivable Accounts receivable are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Accounts receivable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment Cash and cash equivalents In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. In the consolidated balance sheet, bank overdrafts are included within current liabilities Financial assets Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorized as held for trading unless they are designated as hedges. The Group currently does not have any derivatives designated as hedges for hedge accounting purposes. Currently the Group has only derivatives in this category. Financial assets in this category are classified as current assets. (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group s loans and receivables comprise Accounts receivable, Other receivables and Cash and cash equivalents Recognition and measurement Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the consolidated statement of comprehensive income. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortized cost using the effective interest method. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivatives financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivative instruments are recognized in Other operating expenses Impairment of financial assets (a) Assets carried at amortized cost The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated statement of comprehensive income If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor s credit rating), the reversal of the previously recognized impairment loss is recognized in the consolidated statement of income and other comprehensive income Shareholder s equity Ordinary shares are classified as equity. Preference shares for which the Company does not have an unconditional right to avoid delivering cash or another financial asset, are classified as liabilities (note 2.15). After the IPO, there are no longer any preference shares. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. RenoNorden 33

36 Where any Group company purchases the Group s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company s equity holders. Foreign currency translation reserve The translation reserve is comprised of foreign currency rate changes arising from the translation of financial statements of the Group s foreign entities into NOK. On disposal of a foreign operation, the related cumulative translation differences recognized in equity are reclassified to profit or loss and are recognized as part of the gain or loss on disposal Accounts payable Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method Bank borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortized over the period of the facility to which it relates Preference shares Preference shares for which the Company does not have an unconditional right to avoid delivering cash or another financial asset, are classified as liabilities. The existing preference shares up to the IPO have a demand feature and are classified as current liabilities and recognized at the amount payable on demand. Discounting is evaluated not to be relevant. The Preference Share Return is recognized in the consolidated statement of comprehensive income as interest expense. After the IPO there are no longer any preference shares in the Company Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognized in the consolidated statement of comprehensive income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognized on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilized. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services provided or products delivered, stated net of discounts, returns and value added taxes. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the Group s activities, as described below. Revenues is earned from contracts with municipalities and businesses primarily related with waste collection services, rental revenues from the leasing of bins or containers, and sale of bins or bags and other services provided to municipalities and businesses. Contract revenue is variable on the number of waste collections and the size of bins. Prices RenoNorden 34

37 of goods and services are fixed in the initial contact, and is subject to index regulation between 1 and 4 times per year. The Group recognizes revenue as the services are provided or the products are delivered Interest income Interest income is recognized using the effective interest method Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. The Group leases certain equipment, specifically waste disposal vehicles. Leases of equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Finance lease payments are allocated between liability and finance charges. The corresponding rental obligations, net of finance charges, are included in current and non-current liabilities. The equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term Pension For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. The Group also has a contractually regulated pension plan in Norway ( avtalefestet førtidspensjon or AFP) that is a multi-employer agreement where the Company has agreed on the level and duration of the pension benefits. As it is currently not possible to reliably measure the individual pension components in this pension agreement, it is recognized in the financial statements similarly to the defined contribution plan, discussed above New standards not yet adopted Standards, amendments and interpretations that were adopted early in connection with the conversion to IFRS IFRS 10, 11 and 12 were early adopted in connection with the conversion to IFRS. Standards, amendments and interpretations to existing standards that were not effective at December 31, 2014 and have not been adopted early by the Group. IFRS 9 Financial Instruments addresses the classification, measurement, and recognition of financial assets, financial liabilities and hedge accounting. The final IFRS 9 standard was issued in July The Group is yet to assess IFRS 9 s full impact. IFRS 9 is effective on January 1, 2018 with early application permitted. IFRS 15 Revenue from Contracts with Customers establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. The Group is yet to assess the impact of adopting IFRS 15. IFRS 15 is effective for annual periods beginning on or after January 1, IFRIC 21, Levies sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognized. The Group does not expect the implementation of IFRIC 21 to have a material impact on their consolidated financial statements. IFRIC 21 is effective for annual periods beginning on or after January 1, There are no other standards or interpretations that are not yet effective that are expected to have a significant impact on the consolidated financial statements. Note 3. Financial risk management The Group s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The Group uses derivative financial instruments to economically hedge certain risk exposures, such as diesel prices and interest rates. The Group does not use hedge accounting. Risk management is carried out by the CFO and his staff under policies approved by the board of directors. The CFO identifies, evaluates and hedges financial risks in close co-operation with the Group s operating units. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. Risk management policies and procedures are reviewed regularly to reflect changes in market condition and the Group s activities. 3.1 Financial risk factors a) Market risk Market risk can be defined as the risk that the Group s income and expenses, future cash flows or fair value of financial instruments will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as diesel fuel price risk. Market risk is monitored and actively managed by the Group through a combination of natural hedging techniques and financial derivatives. RenoNorden 35

38 (i) Currency risk For risk management purposes, two types of currency exposure have been identified: Translation into the presentation currency Being a multinational Group, the Group faces currency risk arising from the translation of entities whose functional currency differs from the presentation currency of the Group. This exposure does not give rise to an immediate cash effect; however it may impact the Group s financial covenants and is therefore monitored. Exposure related to equity in foreign currency is generally not hedged. Foreign currency transactions The Group s business model is to provide services from the local subsidiary to municipalities in their local currency, and most costs are also incurred in local currency. Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark, such that the financing does not give rise to significant currency exposures for the Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency exchange rate risks relating to various transactions in currencies other than the functional currency. (ii) Cash flow interest rate risk The Group is exposed to interest rate risk fluctuations mainly due to the DNB bank loans, with variable interest rates that are based on NIBOR (or comparable for the local country) plus a margin. In order to mitigate the risk of fluctuations in the variable interest rates, management has entered into certain interest rate caps derivative financial instruments. This sets a ceiling on the variable portion of the interest expense to 2.8 percent and therefore limits the potential cash outflows and reduces liquidity fluctuations. (iii) Diesel fuel price risk The Group is exposed to diesel fuel price risk fluctuations in each of their countries of operations. This risk is managed through the purchase of diesel caps derivative financial instruments. These derivative instruments cap the diesel prices the Group will pay, in the event of increases in diesel prices for the period the contracts are entered into, and therefore limits the potential cash outflows and reduce liquidity fluctuations. The group dose not have any active diesel cap positions at December 31, 2014 and December b) Credit risk The Group believes that the credit risk is minimal since the Group s customers are the majority municipal governments, and all cash balances are on deposit with Nordea and Danske Bank. c) Liquidity risk Liquidity risk arises from the Group s potential to meet its financial obligations towards suppliers and debt capital providers. In addition to the management of interest rate and diesel fuel price risks, liquidity management represents a key element of our financial management. The goal of liquidity management is to ensure the ability to service the Group s commitments and to make payments when they come due. The Group s liquidity situation is closely monitored and rolling forecasts of cash flows and cash holdings are prepared monthly. In 2014 the schedule of payments related to the specific financial liabilities bank loans and financial leases are disclosed in the relevant note. The Shareholder loans (PIK notes) and class A shares (preference shares) were payable on demand, see notes 2.15 and 24 Shareholder loans. Current financial liabilities are scheduled to be paid within the next 12 months. After the IPO there is only one type of shares in the Company and all Shareholder loans have been settled. 3.2 Capital management The Group s objectives when managing capital are to grow the business while safeguarding the Group s ability to continue as a going concern. The Group has an objective to maintain a capital structure that gives the Group the lowest possible cost of capital given current market conditions. The Group has a policy to use finance leases for the purchase of operational assets. Financing of the subsidiary acquisitions was achieved through shareholder loans and the issuance of preference shares. Other financing needs are met through the use of bank borrowings. Bank borrowings are denominated at the local currency of the subsidiary. Cash outflows related to interest payments are capped with the purchase of interest rate cap contracts. On bank loan covenants RenoNorden ASA shall ensure that the adjusted leverage in respect of any Relevant Period shall not exceed 5.00:1. In addition RenoNorden ASA shall ensure that the Interest Cover in respect of any relevant period shall not be less than 4.00:1. Cash is managed by use of a Group cash pool to manage the cash needs for all of the subsidiaries. All Group bank accounts and the cash pool treasury management is with Nordea and Danske bank. The Group has short-term bank borrowing facilities for short-term cash needs. In accordance with the Group policy to have maximum cash available to grow the business, no dividends have been paid out in 2011, 2012 or The Board proposes a dividend pay-out of NOK 50 million for Note 4. Critical accounting estimates and judgments When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The judgments, apart from those involving estimations, that management has made in the process of applying the entity s accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements are discussed below. Preference shares In the accounting for preference shares, the Company has interpreted the Investment Agreement such that the RenoNorden 36

39 Company does not have an unconditional right to avoid delivering cash or another financial asset. Consequently, the Preference Shares are classified as liabilities. IAS 39 Financial Instruments: Recognition and Measurement combined with IFRS 13 Fair Value Measurements are interpreted to require recognition of the minimum Preference Share Return on initial recognition of the liability. Due to a demand feature the fair value is estimated at the total amount that can be required to be paid (guaranteed minimum return). Discounting is evaluated not to be relevant. The Preference Share Return is recognized in profit or loss as interest expense and in the balance sheet as a current financial liability. As the Investment Agreement was signed in September 2011, the Preference Share Return, for IFRS reporting purposes was an interest expense in 2011, so is therefore shown as an equity adjustment in the January 1, 2012 opening IFRS balance sheet. Subsequent measurement of any changes in the Preference Share Return will affect profit or loss, and for the total of Shareholder Loans and Preference Shares no net interest expense is recognized until the aggregate accumulated return based on the stated annual returns exceed the minimum Preference Share Return. The preference shares was cancel and converted to ordinary shares on general meeting November 27, See notes 22 Related parties and shareholder transactions for additional information. Impairment of non-current assets IAS 36 requires that the Group assess conditions that could cause an asset to become impaired and to test recoverability of potentially impaired assets. These conditions include internal and external factors such as the Group s market capitalization, significant changes in the planned use of the assets or a significant adverse change in the expected prices, sales volumes or raw material cost. Each Cash Generating Unit (CGU) or individual asset is reviewed for impairment indicators. Most of the Group s assets are assigned to CGUs. The identification of CGUs involves judgment, including assessment of where active markets exist, and the level of interdependency of cash inflows. For the Group, the CGU is the group of assets employed within one country, as all of these assets serve a common market. If a loss in value is indicated, the recoverable amount is estimated as the higher of the CGU s fair value less cost of disposal, or its value in use. Calculation of value in use is a discounted cash flow calculation based on continued use of the assets in its present condition, excluding potential exploitation of improvement or expansion potential. Determination of the recoverable amount involves management estimates on highly uncertain matters, such as commodity prices (diesel fuel) and their impact on markets, development in demand, inflation, operating expenses and tax and legal systems. Management uses internal business plans, quoted market prices and our best estimate of commodity prices, currency rates, discount rates and other relevant information. A detailed forecast is developed for a period of three to five years with projections thereafter. Business combinations and goodwill In a business combination consideration, assets and liabilities are recognized at estimated fair value, and any excess purchase price is included in goodwill. Valuation models are used to estimate the fair value of acquired intangible assets. Such valuations are subject to numerous assumptions including the useful lives of assets and the timing and amounts of certain future cash flows, which may be dependent on discount rates and other factors. In accordance with IAS 36, goodwill and certain intangible assets are reviewed at least annually for impairment. As part of the transition to IFRS, the Group allocated goodwill to Norway, Sweden and Denmark based on average key figures in 2011 (revenues, EBITA and total capital employed) in the respective countries. As part of the 2013 acquisition in Finland, the Group performed a purchase price allocation. The total excess value was allocated to customer contracts, technology and goodwill. This allocation required the use of estimates and management judgment. The fair value of customer contracts has been estimated based on contract length and expected net cash flow after an asset charge of 3.9 percent of the carrying value of machinery and equipment. If the expected net cash flow had been lower, and/or the asset charge higher, the Group would have recognized a lower amount on customer contracts and a higher amount on goodwill related to the acquisition. The fair value of technology assets was estimated based on expected replacement cost. If the expected replacement cost had been lower, the Group would have recognized a lower amount on Technology and a higher amount on goodwill related to the acquisition. See note 20 Business combinations for additional information. RenoNorden 37

40 Note 5. Segment information and seasonality The Group identifies its reportable segments and discloses segment information under IFRS 8 Operating Segments. This standard requires RenoNorden to identify its segments according to the organization and reporting structure used by management Management considers the business from both a geographic and a service perspective. Geographically, management considers the performance in Norway, Denmark, Sweden and Finland. From a service perspective, all geographic segments have municipal contracts and, additionally, Finland has specific corporate contracts. Management assesses the performance of the operating segments based on a measure of EBITDA. This measurement basis excludes discontinued operations and the effects of non-recurring expenditures from the operating segments such as restructuring costs, legal expenses and goodwill impairments when the impairment is the result of an isolated, non-recurring event. The measure also excludes the effects of equity-settled share-based payments and unrealised gains/losses on financial instruments. The Group s business is seasonal, and has historically realised a higher portion of its operating revenue and EBITDA in the second and third quarter of each year. This seasonality is a characteristic of the business in which it operates. During the warmer summer months the Group increases the frequency of collection for biodegradable waste matter. Furthermore, the Group also collects from areas where holiday properties require additional collections in the summer holiday season. In December 2013 the Group acquired the Finnish operations. As the business combination was completed at year-end, 2013 profit or loss does not include the Finnish operations. Consequently the result are not comparable the 2014 result. Major Customers by Segment Revenue: For Norway in 2014, two customers contributed 23% of the Norwegian segment s total revenue. For Norway in 2013, two customers contributed 24% of the Norwegian segment s total revenue. For Sweden in 2014, five customers contributed 62% of the Swedish segment s total revenue. For Sweden in 2013, five customers contributed 58% of the Swedish segment s total revenue. In both 2014 and 2013, Denmark did not have any customers with revenues greater than or equal to 10% of the Danish segment s total revenue. In 2014, Finland did not have any customers with revenues greater than or equal to 10% of the Finnish segment s total revenue. For all the segments for both 2014 and 2013, no single customer generated more than 10% of total Group revenues. Total operating revenue specified by geographic area: NOK 1, Norway 585, ,259 Sweden 338, ,690 Denmark 422, ,374 Finland 233,576 - Total operating revenues 1,579,306 1,268,323 CAPEX specified by segment: NOK million Norway (35) (55) Sweden (45) (39) Denmark (46) (45) Finland (21) NA Total CAPEX (147) (139) Non-current operating assets specified by segment NOK 1,000 Dec 31, 2014 Dec 31, 2013 Norway 232, ,663 Sweden 231, ,072 Denmark 192, ,727 Finland 72,077 59,835 Total property plant and equipment 729, ,297 EBITDA by segment: NOK 1, Norway* 149, ,145 Sweden 54,304 45,121 Denmark 54,500 57,933 Finland 25,899 NA Other 44,181 7,213 Total EBITDA 240, ,986 Less depreciation and amortization 107,030 85,571 Operating profit/loss 133, ,415 * As of 2014 administration costs related to the Group cost is moved from Norway to Other segment. RenoNorden 38

41 Note 6. Employee benefit expense Employee benefit expense NOK 1, Salary expense 651, ,844 Social security costs 75,652 71,318 Pension expense-defined contribution plans 48,233 35,058 Other benefits 29,118 11,116 Total employee benefit expense 804, ,336 Average number of employees 1,448 1,273 Key management compensation 2014 NOK 1,000 Salary Variable salary Pension premiums Other benefits Shareholding Staffan Ebenfelt (CEO)* 2, , % Jon Kristian Flesvik (CFO) 1, , % Andreas Westin (Head of business development)** , % Svein Tore Aurland (Country Manager Norway)*** 1, NA NA Fredrik Eldorhagen (Country Manager Norway)**** , % Torben Lindholm (Country Manager Denmark) 1, , % Jukka Koivisto (Country Manager Finland) 1, , % Peter Ekholm (Country Manager Sweden) 1, , % * Started in the Group January 15, 2014 ** Started in the Group March 24, 2014 *** Left the Group June 30, 2014 **** Started in the Group July 1, 2014 Key management compensation 2013 NOK 1,000 Salary Variable salary Pension premiums Other benefits Shareholding Svein Tore Aurland (CEO) 1, , % Jon Kristian Flesvik (CFO) 1, , % Torben Lindholm 1, , % Peter Ekholm , % Board of Directors compensation There has not been paid any compensation to the board or any sub-group of the board in 2013 or The Company has not granted any loans, guarantees or other commitments to any of its Board Members or to any member of the Management. The CEO s remuneration terms are reviewed and decided annually by the Board of Directors. The remuneration decision takes into consideration the overall performance of the CEO and the Company, and the market development for CEO remuneration in companies of similar complexity, size and industries. The CEO decides the remuneration for other members of executive management. The structure of the executive management incentive system is determined by the Board of Directors and presented as information to the General Meeting. The incentive system consists of base salary, annual bonus agreement, pension, long-term incentive program and other minor benefits. There is a cap on the variable salary for the Executive Management of 7/12 of annual salary. Certain members of key management given certain circumstances are entitled to up to six months of severance compensation in addition to the notice period. See the Group corporate governance report for further information. Definitions Salary The column comprises ordinary salary received in the year. Variable salary The column contains bonus payments received at the start of the year, based upon the previous year s performance. RenoNorden 39

42 Pension premiums Group Management members participate in the same pension plans as other employees in the jurisdiction they are employed. The CEO does not participate in the defined benefit plan and receives a fixed compensation instead. Other benefits The column comprises the value of other benefits received by Group Management and Board members during the year, including value of interest-free loans, car allowance, health insurance etc. Share holding The column shows number of shares owned by the Board members, officers and companies controlled by them and their families. Pension Norway: The Norwegian companies are required to have a compulsory pension plan under Norwegian Law. The Group has a pension plan that fulfills the legal requirements, which covers all employees and is a defined contribution plan. The defined contribution plan s contribution requirement in Noway is 3% of the total salary expense over 1G per person. As of December 31, 2013 there were 474 participants in the Norwegian pension scheme. The expensed pension cost in Norway is NOK 8,543 thousand. Denmark: The Danish blue collar employees receive 8% of annual salary in pension contribution, while white collar management receives between 5%-12% of their annual salary as pension contributions, as is agreed between Danish employees and the employee s organizations. The expensed pension cost in Denmark is NOK 18,876 thousand. Sweden: Swedish companies that are members of the Swedish employers association are required to pay supplementary retirement pension as part of the collective agreement. Following the collective agreement RenoNorden AB pays 4.5% of blue collar employees salaries as retirement pension. For white collar employees RenoNorden AB follows the ITP1 pension plan paying 4.5 % of monthly salaries up to approximately 36,000 SEK and 30% of the amount above 36,000 SEK. The expensed pension cost in Sweden is NOK 5,299 thousand. Finland: The Finnish labor pension law requires the companies to establish a pension plan in a licensed pension insurance company that covers all its employees. The employer contributes between and 24.7% of the paid salaries and the employee between 5.7 and 7.2% of received salaries to the pension plan. All of the personnel was covered by the pension plan as of Dec 31, The expensed pension cost in Finland is NOK 15,513 thousand. Auditor fees NOK 1, Audit fee 1, Attestation services Tax and other services Audit related services in connection with IPO 2, ,828 1,647 Note 7. Other operating expenses Note 8. Finance income and expenses Other operating expenses include the following items: NOK 1,000 Dec 31, 2014 Dec 31, 2013 Fuel costs 117,551 96,347 Operating truck expenses, maintenance etc 140, ,594 Operating leasing expenses trucks 40,074 36,232 (Gains) Losses on financial derivatives 248 (2,688) Expenses rented premises 27,840 22,549 IPO expenses 26,674 - Management fee 3,792 4,044 Other 20,094 18,218 Total operating expenses 376, ,296 Finance income and expenses includes the following items: NOK 1,000 Dec 31, 2014 Dec 31, 2013 Interest income 8,463 2,946 Other financial income - 10 Interest expense (46,898) (43,928) Interest expenses on financial leasing (16,595) (5,194) Other financial expenses (5,048) (5,216) Net currency gain/(loss) (6,254) (13,250) Amortized origination fees (6,567) (6,567) Write down origination fees (24,627) - Financial derivatives (413) (2,656) Total finance income and expenses (97,939) (75,732) RenoNorden 40

43 Note 9. Income tax Income tax expense NOK 1,000 Dec 31, 2014 Dec 31, 2013 Tax payable for the current year 10,266 5,132 Changes in deferred tax* 17,586 7,051 Total income tax expense 7,320 12,183 * The change in deferred tax assets/liabilities is calculated based on temporary differences between accounting and tax values. Deferred tax liability NOK 1,000 Dec 31, 2014 Dec 31, 2013 Deferred tax liabilities (49,626) (40,312) Changes of deferred tax liabilities 17,586 (7,051) Change in liability due to acquisition of subsidiary - (2,263) Currency translation (1,078) - Deferred tax liabilities (33,117) (49,626) NOK 1,000 Dec 31, 2014 Dec 31, 2013 Income tax expense based on the weighted average nominal tax rate 9,242 15,633 Tax effect of permanent differences* 16,562 3,450 Income tax expense for the year 7,320 12,183 Effective tax rate 21% 20% * The tax gain is caused by permanent tax differences mainly related to: Reversal of interest expense on PIK-notes. Under IFRS, the interest expense on PIK notes is included in the Preference Share Return amount booked as a liability in the January 1, 2012 opening IFRS balance sheet. Therefore, no interest expense is recognized on PIK-notes in the Group s Consolidated Statement of Comprehensive Income for Under local GAAP and for tax purposes the interest expense on PIK notes is recognized as an interest expense in Refer to note 4 for further details. Reversal of amortization expense on goodwill. Under IFRS, no expense from amortization of goodwill is recognized in the Group s Consolidated Statement of Comprehensive Income for Under local GAAPs and for tax purposes, a portion of the total goodwill (i.e. local goodwill related to earlier acquisitions) is amortized and expensed over the estimated useful life of the acquisitions. Specification of temporary differences NOK 1,000 Dec 31, 2014 Dec 31, 2013 Accounts receivable (138) (65) Property plant and equipment 250, ,241 Finance lease obligation (117,567) (92,166) Derivative financial instruments Capitalized origination fee 5,470 - Intangible assets 11,169 11,185 Interest deduction carryforward (11,772) - Total temporary differences 137, ,609 Tax loss carryforward - (573) Base for deferred tax liability 137, ,036 The Group s weighted average nominal tax rate is 26.3% in 2014 and 25.3% in Temporary differences are assumed to be reversed at currently enacted rates. Note 10. Earnings per share Basic and diluted earnings per share is calculated by dividing profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year excluding ordinary shares purchased by the Company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. There are no dilutive potential ordinary shares in the Company in 2014 and Therefore, there is no difference between the basic earnings per share and diluted earnings per share in 2014 and RenoNorden 41

44 Cont d Note 10. Earnings per share Net profit attributable to ordinary equity holders of the parent (NOK 1 000) 42,486 49,499 Weighted average number of ordinary shares in issue (thousands)* 7,056 5,363 Basic earnings per share from profit for the year attributable to the ordinary shareholders (NOK) Diluted earnings per share from profit/loss for the period attributable to the ordinary shareholders (NOK) * The Company purchased 144,135 and 123,429 ordinary shares during 2014 and 2013, respectively. The weighted average number of shares is calculated based on the assumption that the treasury shares were purchased and sold evenly throughout the year. At the end of 2014, there are no treasury shares held by the Group. Note 11. Intangible assets NOK 1,000 Goodwill Customer contracts IT systems Patents Total Cost at Dec 31, , ,287 Additions Additions acquisition Finland 54,978 6,874 5,868-67,720 Disposals Cost at Dec 31, ,025,108 6,874 5, ,038,205 Additions Adjustment on cost price (1,977) (1,977) Disposals Exchange difference 4, ,279 Cost at Dec 31, ,027,829 7,299 6, ,042,337 Accumulated amortization and impairment charge Dec 31, 2012 (13,606) - - (57) (13,663) Amortization charge (54) (54) Accumulated amortization and impairment charge Dec 31, 2013 (13,606) - - (111) (13,717) Amortization charge - (1,453) (587) (112) (2,152) Accumulated amortization and impairment charge Dec 31, 2014 (13,606) (1,453) (587) (223) (15,869) Opening book value as at Jan 1, , ,624 Additions Additions acquisition Finland 54,978 6,874 5,868-67,720 Amortization charge (54) (54) Net book value as at Dec 31, ,011,502 6,874 5, ,024,488 Opening book value as at Jan 1, ,011,502 6,874 5, ,024,488 Additions Adjustment on cost price (1,977) (1,977) Amortization charge - (1,453) (587) (112) (2,152) Foreign currency translation effect 4, ,279 Net book value as at Dec 31, ,014,223 5,846 5, ,026,468 Patents are amortized over useful life (3 years). Customer contracts are amortized over the contract length. IT systems are amortized over expected useful life (10 years). RenoNorden 42

45 Cont d Note 11. Intangible assets Impairment tests for goodwill Management reviews the business performance at the Cash Generating Unit (CGU) level, which is defined by the geographical segment level. It has identified Norway, Sweden, Denmark and Finland as the main geographies and hence CGUs. Goodwill is monitored by the management at this CGU level, which is also the identified operating segment level. The following is a summary of goodwill allocation for each operating segment: 2014 NOK 1,000 January 1 Additions Adjustment on cost price Impairment Exchange difference December 31 Norway 531, ,524 Sweden 175, ,000 Denmark 250, ,000 Finland 54,978 - (1,977) - 4,698 57,699 Total 1,011, ,014, NOK 1,000 January 1 Additions Adjustment on cost price Impairment Exchange difference December 31 Norway 531, ,524 Sweden 175, ,000 Denmark 250, ,000 Finland - 54, ,978 Total 956,524 54, ,011,502 The recoverable amount of all CGU s has been determined based on value-in-use calculations. These calculations use after-tax cash flow projections based on the financial budget approved by management covering a five-year period. Cash flows beyond the five year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for business in which the CGU operates. The key assumptions used for value-in-use calculations in 2014 are as follows: NOK 1,000 Norway Sweden Denmark Finland Compound annual growth in revenues 2.2% 8.8% 8.1% 12.9% Expected long term growth rate in net cash flows after the 5 year period 2.5% 2.5% 2.5% 2.5% Discount rate after-tax 6.3% 5.6% 5.5% 5.4% Corresponding discount rate pre-tax 7.8% 6.5% 6.5% 6.1% The key assumptions used for value-in-use calculations in 2013 are as follows: NOK 1,000 Norway Sweden Denmark Finland Compound annual growth in revenues 1.5% 3.5% 1.0% 11.4% Expected long term growth rate in net cash flows after the 5 year period 2.5% 2.5% 2.5% 2.5% Discount rate after-tax 7.0% 6.6% 6.1% 6.0% Corresponding discount rate pre-tax 8.8% 7.7% 7.2% 6.8% The assumptions above have been used for analysis of each CGU within the operating segment. RenoNorden 43

46 Cont d Note 11. Intangible assets Management determined the compound annual volume growth rate for each CGU covering the five-year forecast period to be a key assumption. The compound annual volume growth rate is based on past performance and management s expectations of market development. The long term growth rates used are consistent with the forecasts included in industry reports. The discount rates used are after tax and reflect specific risks relating to the relevant operating segments. Sensitivity of recoverable amounts Recoverable amounts determined for impairment testing purposes were tested for their sensitivity to a 1% increase in discount rate after-tax, a 1% decrease in the long-term growth rate and a reduction in the EBITDA margin of 2%. These tests did not identify recoverable amounts lower than the net carrying amount of any cash-generating unit for December 31, 2013 and December 31, Note 12. Equipment NOK 1,000 Year ended December 31, 2013 Equipment and machinery Fixtures and fittings Fixed assets total Opening net book value 519,011 7, ,732 Additions 240,261 2, ,030 Disposals (8,930) (19) (8,949) Depreciation charge for the year (83,501) (2,016) (85,517) Net book value December 31, ,841 8, ,296 Year ended December 31, 2014 Opening net book value 666,841 8, ,296 Additions 145,052 1, ,895 Disposals (10,116) (27) (10,143) Depreciation charge for the year (102,033) (2,845) (104,878) Foreign currency translation effect 21, ,969 Net book value December 31, ,442 7, ,138 Assets are depreciated linearly over the useful life of the asset. Below is the estimated useful life of each asset class: Equipment and machinery* 3-15 years Fixtures and fittings 3-15 years *Includes waste disposal trucks 7-12 years RenoNorden 44

47 Note 13. Derivative financial instruments Financial derivatives by instrument type Dec 31, 2014 Dec 31, 2013 NOK 1,000 Assets Liabilities Assets Liabilities Interest rate cap derivative contracts Diesel cap derivative contracts Total Trading derivatives are classified as current assets. All positions are long European or Asian calls and will therefore always be classified as assets and not liabilities. Both diesel cap and interest rate cap contracts are considered to be level two in the fair value hierarchy. The Group does not use hedge accounting for any of their interest rate or diesel price exposures. Interest rate cap contracts The interest rate caps are OTC European and Asian call contracts with Nordea and DNB in the respective countries where the Group has operations. Management considers counterparty risk on these contracts to be low. Notional principal amounts The notional principal amounts of the outstanding interest rate cap contracts as of year are as follows: Financial derivatives by instrument type In local currency In NOK NOK 1,000 Dec 30, Dec 30, 2015 Dec 30, Dec 30, 2016 Dec 30, Dec 30, 2015 Dec 30, Dec 30, 2016 NOK 500, , , ,000 SEK 83,000 76,000 79,655 72,937 DKK 126, , , ,564 Total , ,501 The interest rate cap contracts are economic hedges against increases in the interest rates on bank borrowings. The derivative contracts cap the NIBOR, STIBOR and CIBOR which is the base of the variable interest rate agreements with the banks, at 2.8 %. The loan agreements have variable interest rates designated by the relevant interbank offered rate plus a margin ranging between 1.75 and 2.0. The loss on the hedging positions in 2014 was NOK 2,617 thousands (2013: NOK 1,502 thousand). Diesel cap contracts The diesel cap contracts are bought as hedges to increases in the diesel prices in Norway, Sweden and Denmark as this is a large portion of the Group s operating costs. The Group s hedging strategy is to enter into one month diesel cap contracts over the time period from March 1 to expiration at year-end. The Group does not have any active diesel cap positions at December 31, 2014 and December 31, Note 14. Accounts receivable NOK 1,000 Dec 31, 2014 Dec 31, 2013 Accounts receivable 213, ,007 Less provision for impairment of receivables Accounts receivables net 213, ,007 The Group s receivables are with local municipalities, with high credit ratings and little or no credit losses. The aging of accounts receivable NOK 1,000 Dec 31, 2014 Dec 31, 2013 Up to 3 months 212, ,707 3 to 6 months Over 6 months Total accounts receivable 213, ,007 The maximum exposure to credit risk at the reporting date is the carrying value of accounts receivable as disclosed above. The Group does not hold any collateral as security. RenoNorden 45

48 Note 15. Cash and cash equivalents NOK 1,000 Dec 31, 2014 Dec 31, 2013 Bank Deposits 219, ,600 Total Bank deposits 219, ,600 Specification of restricted deposits Restricted bank deposits for employee tax withholdings 2,759 2,714 The maximum exposure to credit risk at the reporting date is the carrying value of cash and cash equivalents as disclosed above. The RenoNorden Group has organized all operative accounts in a cash pool structure with RenoNorden Investments AS as pool owner. Note 16. Leases Financial Leases The Group s financial leased assets include buildings, machinery and equipment. In addition to the interest expense, the Group is responsible for maintenance, insurance and property taxes related to the assets. The leases have maturities ranging from 10 to 25 years, many of them carry an option of renewal. The contracts do not restrict the Group s ability to pay out dividends or other financing options, except in Denmark where the contracts require an equity ratio of 10% in the Danish subsidiary. Assets under finance leases NOK 1,000 Dec 31, 2014 Dec 31, 2013 Property plant and equipment 514, ,704 Cost capitalised finance lease 514, ,704 Accumulated depreciation (98,914) (103,666) Net book amount 415, ,038 Gross finance lease liabilities - minimum lease payments NOK 1, No later than 1 year 62,173 64,116 Later than 1 year and no later than 5 years 303, ,449 Later than 5 years 44,925 98,053 Total of future minimum lease payments 411, ,618 Future finance charges on finance lease liabilities (15,754) (18,705) Present value of minimum future leasing amount 395, ,913 The present value of finance lease liabilities is as follows NOK 1, No later than 1 year 58,166 61,948 Later than 1 year and no later than 5 years 293, ,862 Later than 5 years 43,458 92, , ,913 The leasing contracts has an interest over the relevant interbank offered rate plus a margin between 2.0% and 2.5%. Operating Leases Operating lease payments are expensed in profit or loss as part of operating expenses. The contracts do not restrict the Group s ability to pay out dividends or other financing options. Operating lease payments NOK 1, Operating lease payments vehicles/trucks 7,484 13,683 Operating lease payments office 25,202 22,549 Total operating lease payments 32,686 36,232 Commitments - operating vehicles/trucks NOK 1, Within 1 year 9,147 12,586 1 to 5 years 4,334 11,079 After 5 years Total commitments operating leases 13,481 24,578 RenoNorden 46

49 Cont d Note 16. Leases Commitments as of Dec 31, 2014 operating office leases NOK 1,000 Norway Sweden Denmark Finland Total Within 1 year 8,213 4,837 3, ,696 1 to 5 years 9,160 7,240 3, ,996 After 5 years Total commitments operating leases 17,373 12,076 6, ,692 Commitments as of Dec 31, 2013 operating office leases NOK 1,000 Norway Sweden Denmark Finland Total Within 1 year 8,113 4,533 2, ,713 1 to 5 years 15,481 8,239 2, ,324 After 5 years ,029 Total commitments operating leases 23,942 13,453 4, ,067 Note 17. Interest-bearing debt NOK 1,000 Dec 31, 2014 Dec 31, 2013 Non-current Bank borrowings 760, ,184 Current Bank borrowings 89, ,707 Total bank borrowings 849, ,891 Bank borrowings RenoNorden 47

50 Cont d Note 17. Interest-bearing debt NOK 1,000 Loan Facility Loan origination date Initial loan frame in local currency Max contractual interest rate Termination date Facility A1 Sep 28, ,552 NOK Nibor+3.25% Dec 16, 2014 Facility A2 Sep 28, ,882 DKK Cibor+3.25% Dec 16, 2014 Facility A3 Sep 28, ,459 SEK Sibor+3.25% Dec 16, 2014 Carrying Value Dec 31, 2014 Dec 31, 2013 Total A - 238,155 Facility B1 Sep 28, ,327 NOK Nibor+3.75% Dec 16, 2014 Facility B2 Sep 28, ,322 DKK Cibor+3.75% Dec 16, 2014 Facility B3 Sep 28, ,189 SEK Sibor+3.75% Dec 16, 2014 Total B - 539,222 RC-Facility Sep 28, ,000 NOK Nibor+3.25% Dec 16, 2014 CAPEX Facility Sep 28, ,000 NOK Nibor+3.25% Dec 16, 2014 Total CAPEX and revolving - 97,038 Facility A Dec 16, ,000 NOK IBOR+2.00% Dec 19, 2014 Total A 616,576 - Facility B Dec 16, ,000 NOK IBOR+1.75% Dec 19, 2014 Total B 149,194 - Other bank borrowings 89, ,707 Capitalized origination fee (5,470) (29,231) Total bank borrowings 849, ,891 November 10, 2014, with execution date December 16, the Group refinanced its bank borrowings with a new senior facility of total NOK 970 million mainly used to repay the old bank loans. The facility consists of a term loan facility of NOK 620 million and an RCF facility of NOK 350 million. Both facilities are 5-year bullets. The new credit facility has significantly lower margins, 2.0% (term loan facility) and 1.75% (revolving loan facility) over the relevant interbank offered rate (IBOR*). This will substantially reduce the costs going forward. As a consequence of the refinancing the Group has a write-down NOK 24.6 million relating to origination fees on the old loans. The Group has interest rate risk from long-term borrowings. The interest expense on the facility bank borrowings is a floating rate plus a risk margin. The risk margin is set quarterly by the lender based on an agreed calculation that is dependent on the Group s leverage position. The maximum risk premium is shown in the table above. The Group uses interest rate cap derivatives contracts to hedge the interest rate risk related to their bank borrowings, see Note 13 Derivative financial instruments. The amortized cost carrying value is a close approximation of the current fair value of the borrowings. * IBOR means (in respect of Loans in EUR), EURIBOR, (in respect of Loans in NOK) NIBOR, (in respect of Loans in SEK) STIBOR, (in respect of Loans in DKK) CIBOR and (in respect of Loans in an Optional Currency, other than EUR, DKK and SEK), LIBOR. RenoNorden 48

51 Cont d Note 17. Interest-bearing debt The new bank borrowings are unsecured, with a mutual payment guarantee from the following subsidiaries: RenoNorden Investments AS RenoNorden AS RenoNorden AB RenoNorden A/S RenoNorden Finland Holding Oy HFT Environment Oy The old bank borrowings were secured by land, buildings and machinery, office equipment, as well as accounts receivable and inventory held by the Group. Secured assets Value of assets secured NOK 1,000 Dec 31, 2014 Dec 31, 2013 Land and buildings Machinery and equipment - 625,184 Office equipment - 4,861 Accounts receivable - 206,007 Inventory - 5,651 Total book value - 842,086 The table below analyses the Group s bank borrowings into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Note 18. Other current liabilities Secured assets NOK 1,000 Dec 31, 2014 Dec 31, 2013 Accrued monitoring fee* 4,222 4,044 Sellers credit related to Finnish acquisition - 9,340 Accrued employee benefit expense 36,377 26,332 Accrued vacation pay 81,396 61,937 Accrued IPO expenses 14,350 - Other current accruals 20,593 56,205 Total other current liabilities 156, ,858 * Accrued Monitoring fee to be paid in 2015, agreement canceled see note 22 for more information. Note 19. Commitments The Group has off-balance sheet commitments related to rental costs, operational leasing on trucks and on Group cars, bank guarantees and subcontractors. The operational lease on trucks has been reduced the last years. See note 16 Leases and note 23 Guarantees for additional information. Contracts with subcontractors vary in length and relate to operational services where we find it more beneficial not to use own trucks. At December 31, 2014 NOK 1,000 < 1 year 1-5 years >5 years Bank Borrowings FAC A - 616,576 - Bank Borrowings FAC B - 149, ,770 At December 31, 2013 NOK 1,000 < 1 year 1-5 years >5 years Bank Borrowings Facility A 80, ,659 - Bank Borrowings Facility B 30, ,248 - RC-Facility 11,417 44,658 - CAPEX Facility 57,797 48,353 - Total 180, ,918 - At December 31, 2014 if the interest rates on denominated bank borrowings had been 10 basis points higher or lower with all other variables held constant, post-tax profit for the year would have decreased/increased by NOK 564 thousands as a result of higher/lower interest expense on floating rate borrowings. RenoNorden 49

52 Note 20. Business combinations The purchase method is used to account for business combinations. Companies acquired or disposed of during the year are consolidated from the date that control commences until the date control ceases There are no business combinations in On December 16, 2013 Asta Investment AS acquired 100% of the share capital of HFT Environment Oy for EUR 8.4 million, that was settled with EUR 7.3 million in cash and EUR 1.1 million in sellers credit. The sellers credit was converted to preference shares, ordinary shares and PIK notes on January 13, 2014, see Note 26 Subsequent events. HFT Environment also owns the subsidiary HFT Network Oy. As the business combination was completed at year end 2013, there was no profit or loss effect from the combination, except expensing of acquisition related costs as discussed below. As a result of the acquisition, the Group will expand into Finland. The goodwill of NOK 55 million arising from the acquisition is attributable to expected future cash flow from operations, assembled workforce and economies of scale expected from combining the operations with existing operations in the Nordic region. None of the goodwill is expected to be deductable for income tax purposes. Consideration as at December 16, 2013 EUR 1,000 NOK 1,000 Cash 7,290 61,106 Sellers credit 1,114 9,340 Total consideration 8,404 70,446 Recognized amounts of identifiable assets acquired and liabilities assumed EUR 1,000 NOK 1,000 Cash and cash equivalents 1,098 9,206 Property and plant Machinery and equipment 7,138 59,835 Investments 1 7 Customer contracts 820 6,874 IT systems 700 5,868 Raw materials and consumables 120 1,007 Other receivables 460 3,858 Account receivables 3,665 30,726 Loans from financial institutions (3,767) (31,576) Short term portion of loans from financial institutions (1,641) (13,752) Other current liabilities (4,362) (36,563) Account payables (2,101) (17,615) Deferred tax liabilities (297) (2,488) Total identifiable net assets 1,845 15,468 Goodwill 6,559 54,978 Total 8,404 70,446 As part of the combination the Group assumed the following assets under financial leasing agreements. Amounts in NOK 1,000 Machinery and equipment 44,869 Financial leasing liability (31,113) Short term portion of financial leasing liability (13,147) Acquisition related costs of NOK 3.5 million have been charged to administrative expenses in the consolidated income statement for December 31, The fair value of trade and other receivables is NOK 30.7 million and NOK 3.9 million. As part of the purchase price allocation the Company identified off-balance sheet intangible assets related to customer contracts. Customer contracts include specific long term contracts recognized at fair value at the acquisition date. The fair value of these contracts has been estimated based on contract length and expected net cash flow after an asset charge of 3.9% of the carrying value of machinery and equipment. As part of the purchase price allocation the Company identified off-balance sheet intangible assets related to IT systems. The fair value of IT systems assets was estimated based on replacement cost. RenoNorden 50

53 Note 21. Investments in subsidiaries The Group has an ownership interest in the following subsidiaries. Investments in subsidiaries are consolidated in the Consolidated Financial Statements. Subsidiaries Acquisition date Derecognition date Office location Country Ownership percentage RenoNorden Investments AS* Sep 30, 2011 Sørum Norway 100% RenoNorden Holding AS** Sep 30, 2011 May 6, 2014 Sørum Norway 100% RenoNorden AS Sep 30, 2011 Sørum Norway 100% RenoNorden AB Sep 30, 2011 Älvsjö Sweden 100% RenoNorden A/S Sep 30, 2011 Herfølge Denmark 100% RenoNorden Finland Holding Oy. Dec 16, 2013 Espoo Finland 100% HFT Network Oy*** Dec 16, 2013 Dec 31, 2014 Espoo Finland 100% HFT Environment Oy. Dec 16, 2013 Espoo Finland 100% * RenoNorden Investments AS changed it s name from Asta Investments AS on November 27, 2014 ** RenoNorden Holding AS merged with RenoNorden Investments AS May 06, 2014 *** HFT Network Oy merged with HFT Environment Oy Dec 31, 2014, with accounting effect from Jan 1, 2015 RenoNorden 51

54 Note 22. Related parties and shareholder transactions Identification of related parties The Group has a related party relationship with subsidiaries and associates (see disclosure note 21) and with its directors and executive officers. All transactions with related parties are based on arms length principles. Year-end payables to related parties The Group has payables of NOK 4.22 million to CapVest/ Accent, the previous majority shareholders, at December 31, 2014 (2013: NOK 4.04 million to CapVest/Accent and NOK 2.93 million to minority investors). The amounts are in connection with monitoring fee according to Monitoring Fee Agreement entered into between the parent company RenoNorden ASA, the CapVest/Accent and the Minority investors on September 30, The amounts booked as expense are 3,792,000 NOK for 2014 and 4,044,429 NOK for 2013, and are recognized in the consolidated statement of comprehensive income as part of other operating expenses. According the agreement, RenoNorden ASA, for each financial year, pays a monitoring fee to the CapVest/Accent (or any other entity nominated by the Lead Investor) and the Minority Investor (or an entity nominated by the Minority Investor) pro rata to their holding of the Group of an amount equal (in aggregate) to 1.5% of the Group s EBITDAR (plus any VAT or overseas equivalent), as determined based on the audited accounts of the Company for the relevant Financial Year. EDITDAR is calculated as net income with interest, taxes, depreciation, amortization, and operational lease rental vehicle expense added back to it. This agreement was terminated Dec 16, Loans from shareholders The shareholders of the Group have provided an interestbearing loan to the Group carrying a fixed cumulative interest of 8% per annum (the Shareholder Loan). The loan was repaid in full by the proceeds from issuance of the New Shares in the public Offering and listing of the Group in December The Principal Shareholders and certain managerial employees of the Company hold class A-shares (preference shares) governed by the Investment Agreement dated September 30, The class A-shares give its holder the right to a fixed cumulative compounded preferential return at an annual rate of 21%. A-class shares was cancelled and converted to ordinary shares prior to the public offering and listing of the Group. The cancellation of 263,027,808 preference shares (out of a total of 278,121,091), each with a nominal value of NOK 0.01, was approved at an Extraordinary Shareholders meeting held November 27, Issuance of the preference shares under IFRS was initially recognized in the financial statements as a short-term shareholder loan in the amount of NOK 276,040 thousand plus a guaranteed return on the preference shares. Cancellation of the preference shares in the amount of NOK 708,399 thousand (principal plus accumulated guaranteed return) was recognized in the financial statements as a reversal of the preference share shareholder loan against share premium and retained earnings. The remaining 15,093,283 preference shares outstanding, together with the Company s outstanding ordinary shares, were then converted into one share class consisting of 20,664,163 total ordinary shares with a par value of NOK This increased share capital by NOK 151 thousand. On December 16, 2014 the Company successfully completed an initial public offering (IPO) of ordinary shares on Oslo Stock Exchange, with an issue of 6,583,785 new shares raising gross proceeds NOK 309 million. In connection with the IPO, the Board of Directors, acting on behalf of the shareholders, allocated Company funds in the amount of NOK 309 million for the repayment of all outstanding shareholder PIK notes, as well as the accrued to date PIK note interest. Shareholder loan - PIK notes Amounts in NOK 1,000 Dec 31, 2014 Dec 31, 2013 PIK notes loan principal - 229,376 Accumulated interest PIK loan - 43,519 Total PIK-notes short term liability - 272,894 Annual interest expense for the PIK loans was NOK 21,765 thousand and NOK 20,174 thousand for the income period 2014 and 2013, respectively. Shareholder loans - Preference shares Amounts in NOK 1,000 Dec 31, 2014 Dec 31, 2013 Preference shares loan principal - 276,040 Recognized minimum preference share return - 502,066 Adjustment for accumulated interest PIK loan - 43,519 Total preference share short term liability - 734,587 Annual stated interest of 21% included in the recognized minimum preference share return - 73,613 Accumulated stated interest of 21% included in the recognized minimum preference share return - 148,901 Shareholder loans total Amounts in NOK 1,000 Dec 31, 2014 Dec 31, 2013 Total PIK-notes liabilities and preference share liabilities - 1,007,482 RenoNorden 52

55 Note 23. Guarantees Amounts in NOK 1,000 Dec 31, 2014 Dec 31, 2013 Bank guarantees 129,597 92,749 Total guarantees 129,597 92,749 Bank guarantees were issued as collateral for the fulfillment of the Group s obligations under their contracts with municipalities. Management believes that the likelihood of any material liability arising from these guarantees is remote. No provision is recognized. Note 24. Subsequent events Denmark acquisition RenoNorden A/S has on December 23, 2014 signed an agreement to acquire two contracts from a competitor in Denmark. The closing of the transaction was conducted January 28, RenoNorden A/S has taken over two contracts, both with effect from January 1, Contract 1 ends January 31, 2016 with 6 months prolonging options and contract 2 ends May 31, 2018 with 24 months prolonging options. In connection with the transaction, RenoNorden has taken over 31 employees and 23 vehicles. The purchase price is DKK 10 million with DKK 7.5 million upfront and DKK 2.5 million as deferred payment. Norway acquisition RenoNorden has on March 5, 2015 acquired NTS Miljø AS in Norway, a subsidiary of NTS ASA. NTS Miljø AS operates one contract, serving several municipalities in northern Norway. The contract expires October 1, Estimated revenue for 2014 is NOK 12.3 million and estimated EBITDA is NOK 4.0 million. NTS Miljø AS has 13 employees and 8 vehicles. Signing and closing of the transaction was completed March 5, Purchase price for 100% of the shares is NOK 4.6 million. The transaction has accounting effect from January 1, RenoNorden 53

56 Parent Company Income Statement RenoNorden ASA NOK 1,000 Note Operating revenues and expenses Other operating expenses 2 (29,259) (5,191) Total operating expenses (29,259) (5,191) Financial items Income from investments in subsidiaries 108,353 27,558 Interest income from subsidiaries Interest income Interest expense 7 (21,765) (20,174) Other financial items Net Financial income/(expenses) 88,057 7,417 Profit/(loss) before taxes 58,798 2,225 Tax income/(expense) 3 (2,376) (6,129) Profit/(loss) for the period 56,423 (3,903) Transfers and allocations (To)/from equity (6,423) 3,903 Dividend proposed (50,000) - Total transfers and allocations (56,423) 3,903 The accompanying notes are an integral part of the financial statements. RenoNorden 54

57 Parent Company Balance Sheet RenoNorden ASA NOK 1,000 Note Dec 31, 2014 Dec 31, 2013 Assets Non-current assets Deferred tax asset 3 3,178 - Investments in subsidiaries 5 509, ,497 Total non-current assets 512, ,497 Current assets Receivables from subsidiaries 6 114,217 5,000 Other current receivables 1, Cash and cash equivalents 6,141 5,843 Total current assets 122,185 10,895 Total assets 634, ,392 The accompanying notes are an integral part of the financial statements. RenoNorden 55

58 NOK 1,000 Note Dec 31, 2014 Dec 31, 2013 EQUITY AND LIABILITIES Equity Share capital 4 27,248 2,814 Treasury shares - (26) Share premium 501, ,625 Retained earnings 28,195 21,148 Total equity 556, ,561 Non-current liabilities Shareholder loans 7-276,578 Total non-current liabilities - 276,578 Current liabilities Taxes payable 3 5,554 - Accounts payable 3,845 - Dividend payable 4 50,000 - Other current liabilities 18,572 8,253 Total current liabilities 77,971 8,253 Total liabilities 77, ,830 Total equity and liabilities 634, ,392 The accompanying notes are an integral part of the financial statements. The Board of Directors of RenoNorden ASA April 10, 2015 Erik Thorsen Chairman Penelope Kate Briant Board member Charlotte G Hansson Board member Alexander Walsh Board member Niklas Nikita Sloutski Board member RenoNorden 56

59 Parent Company Statement of Cash Flows RenoNorden ASA NOK 1,000 Note Cash flows from operating activities Profit before income taxes 58,798 2,225 Change in accounts payable 3,845 - Profit/(loss) recognized as a result of applying the equity method - - Change in other receivables, other current liabilities, and non-cash items (88,910) (3,315) Net cash generated from operating activities (26,266) (1,089) Cash flows from financing activities Group contributions received 10,000 5,385 Proceeds from shareholder loans 7,371 - Repayment of shareholder loans 6 (308,948) - Proceeds from sale of treasury shares 4 5,871 - Proceeds from issuance of equity (private placement) 4 3,420 - Proceeds from issuance of equity (public offering) 4 308,850 - Net cash used in financing activities 26,564 5,385 Net change in cash and cash equivalents 298 4,296 Cash and cash equivalents at the beginning of the period 5,843 1,548 Cash and cash equivalents at the end of the year 6,141 5,843 The accompanying notes are an integral part of the financial statements. RenoNorden 57

60 RenoNorden Parent Company Notes Note 1. Summary of significant accounting policies The financial statements of RenoNorden ASA are prepared in accordance with the Norwegian accounting act and accounting principles generally accepted in Norway (N GAAP). Financial statement preparation requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as disclosures of contingencies. Actual results may differ from estimates. Revenue recognition Dividend income is recognized in profit and loss when the entity s right to receive payments is established. Cost recognition Costs are expensed in the period that the income to which they relate is recognized. Costs that cannot be directly related to income are expensed as incurred. Shares in subsidiaries Shares in subsidiaries, are presented according to the cost method. Group relief received is included in dividends from subsidiaries. Dividend from subsidiaries is recognized in the year for which it is proposed by the subsidiary. Shares in subsidiaries are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may exceed the fair value of the investment. An impairment loss is reversed if the impairment situation is deemed to no longer exist. Foreign currency transactions Realized and unrealized currency gains or losses on transactions are included in Financial income, net. Similarly, unrealized currency gains or losses on assets and liabilities denominated in a currency other than the Norwegian kroner are also included in Financial income, net. This is in accordance with NRS preliminary standard on transactions and accounts in foreign currency. Cash and cash equivalents Cash and cash equivalents includes cash and bank deposits. Pension obligations The company has no employees, and is not obliged to have a pension scheme after the Norwegian Act on Mandatory occupational pensions. Risk management For information about risk management in RenoNorden ASA see note 3 Financial risk management to the consolidated financial statements. Income taxes Deferred income tax expense is calculated using the liability method in accordance with NRS s preliminary standard on income taxes. Under the liability method, deferred tax assets and liabilities are measured based on the differences between the carrying values of assets and liabilities for financial reporting and their tax basis which are considered temporary in nature. The tax effect of equity transactions, such as Group contribution given, is recognized as a part of the equity transaction and do not affect the income tax expense. Other changes in deferred income tax assets and liability balances during the year represent the deferred income tax expense. Changes resulting from amendments and revisions in tax laws and tax rates are recognized when the new tax laws or rates are enacted. Change in accounting principals RenoNorden ASA changed the accounting principal for valuating investment in subsidiaries in 2014, from the equity- to the cost method, for further details see note 5. Cash flow statement The cash flow statement is compiled using the indirect method. Cash and cash equivalents include cash and bank deposits. RenoNorden 58

61 Note 2. Management remuneration, employee cost and other operating expenses See note 6 Employee and management remuneration in the notes to the consolidated financial statements for information and details related to the Corporate Management remuneration. RenoNorden ASA has no employees, and there has not been paid any remuneration to the board or management Expensed audit fee (excluding VAT) NOK 1, Audit fee Attestation services Tax and other services - - Audit related services in connection with IPO 2,479 - Total expensed audit fee 2, Other operating expenses NOK 1, Management fee 3,792 4,044 IPO expenses 25,510 - Other expenses 43 1,147 Total other operating expenses 29,259 5,191 Note 3. Income taxes Distribution of tax income/(expense) for the year NOK 1, Current income tax (5,554) - Change in deferred tax 3,178 (6,129) Income tax (2,376) (6,129) Reconciliation of tax expense NOK 1, Income (loss) before taxes 58,798 2,225 Permanent differences - - Group contribution without tax effect (50,000) - Tax loss carried forward - - Interest deduction carryforward 11,772 (2,225) Taxable income 20, Tax payable 27 % 5,554 - Tax payable in the balance sheet NOK 1,000 Dec 31, 2014 Dec 31, 2014 Payable taxes current year result 5,554 - Tax payable on received Group contribution - - Total tax payable in the balance sheet 5,554 - Temporary differences NOK 1, Interest deduction carryforward 11,772 - Total temporary differences 11,772 - The tax effect of temporary differences resulting in deferred tax assets (liabilities) are: NOK 1, Interest deduction carryforward 3,178 - Deferred tax asset (liabilities) 3,178 - RenoNorden 59

62 Note 4. Number of shares outstanding, equity reconciliation and shareholders At December 31, 2014 the Group s share capital comprises 27,247,948 shares with a nominal value of NOK 1 each. The company had no own shares. NOK 1,000 Share capital Share premium Retained earnings Treasury shares Total Equity Dec 31, , ,625 - (26) 214,413 Change of principal investment in subsidiary* , Equity Dec 31, , ,625 21,148 (26) 235,561 Proceeds from shares issued (private placement) 23 3, ,420 Repurchase of own shares - (3,212) - (24) (3,236) Sale of treasury shares - 5, ,871 Cancellation of preference shares (2,630) 2, Share capital increase 20,458 (20,458) Proceeds from shares issued (public offering) 6, , ,850 Proposed dividend - - (50,000) - (50,000) Profit/(loss) for the year ,423-56,423 Equity Dec 31, , ,445 28, ,889 * See Note 5 - Investments in subsidiaries for further information. Shareholders Number of shares % of shares Asta Netherlands B.V. 3,527,450 12,95% Skandinaviska Enskilda Banken AB 2,679,600 9,83% Accentfourteen Holding Limited 2,232,195 8,19% Danske Bank Corporate Finance 1,842,284 6,76% Vpf Nordea Norge Verdi 1,002,388 3,68% SEB Private Bank S.A. (Extended) 879,000 3,23% Ubs AG 829,500 3,04% Danske Bank A/S 731,058 2,68% Canaccord Genuity Non Us Resa 595,000 2,18% J.P. Morgan Chase Bank N.A. London 586,925 2,15% Verdipapirfondet Handelsbanken 500,000 1,84% Blkrck Glbl Smallcap Fd 487,293 1,79% Klp Aksje Norge Vpf 450,000 1,65% Citigroup Global Markets Limited 439,134 1,61% JP Morgan Chase Bank, NA 425,000 1,56% Cipi-Janus Capital Funds Plc 400,100 1,47% Clearstream Banking S.A. 383,317 1,41% State Street Bank And Trust Co. 366,147 1,34% State Street Bank & Trust Company 350,000 1,28% Citibank, N.A. 305,779 1,12% Other 8,235,778 30,23% Total 27,247, % Shares on foreign hands At Dec 31, (72,07%) See note 6 employee and management remuneration in the consolidated financial statement for further information. RenoNorden 60

63 Note 5. Subsidiaries RenoNorden ASA changed the accounting principal for valuating investment in subsidiaries in 2014, from the equity- to the cost method. The change has resulted in a full retrospective change. The change in principal led to an increase of opening balance in investment subsidiary of NOK 21,148,258 compared to booked value in the official 2013 annual report. Other retained earnings has increased accordingly. The change has been done to adopt to international accounting standards. Investments in subsidiaries are now recorded at cost. Where a reduction in the value of shares in subsidiaries is considered to be permanent and significant, a impairment to net realizable value is recorded. Subsidiaries NOK 1,000 Business office country Ownership share Share of equity 2014 Share of profit 2014 Share of equity 2013 Share of profit 2013 RenoNorden Investments AS* Sørum, Norway 100% 624, , ,614 2,925 * RenoNorden Investments AS changed it s name from Asta Investments AS in 2014 RenoNorden Investments in subsidiaries Investments AS Investment in subsidiaries at ,497 Impairment - Other equity movements - Booked value investment in subsidiaries at ,497 * RenoNorden Investments AS changed it s name from Asta Investments AS in 2014 Note 6. Balance with Group companies Note 7. Long term debt Current receivables from Group companies NOK 1,000 Dec 31, 2014 Dec 31, 2013 RenoNorden Investments AS 103,353 5,000 RenoNorden Finland Holding Oy 10, ,217 5,000 NOK 1, Non-current liabilities* - 276,578 Interest expense on non-current liabilities 21,765 20,174 *The non-current liabilities consists for shareholder loans, which has been paid off in The company has no long term debt as of Dec 31, See note 22 in the consolidated financial statement for further information. RenoNorden 61

64 Responsibility statement We confirm that the consolidated financial statements for 2014 have been prepared in accordance with IFRS as adopted by the EU, as well as additional information requirements in accordance with the Norwegian Accounting Act, and that the financial statements for the parent company for 2014 have been prepared in accordance with the Norwegian Accounting Act and generally accepted accounting practice in Norway, and that the information presented in the financial statements gives a true and fair view of the Company s and Group s assets, liabilities, financial position and result for the period viewed in their entirety, and that the Board of Directors report gives a true and fair view of the development, performance and financial position of the Company and Group, and includes a description of the principle risks and uncertainties. The Board of Directors of RenoNorden ASA April 10, 2015 Erik Thorsen Chairman Penelope Kate Briant Board member Charlotte G Hansson Board member Alexander Walsh Board member Niklas Nikita Sloutski Board member RenoNorden 62

65 Independent Auditors Report To the Annual Shareholders Meeting of RenoNorden ASA Report on the Financial Statements We have audited the accompanying financial statements of RenoNorden ASA, which comprise the financial statements of the parent company RenoNorden ASA and the consolidated financial statements of RenoNorden ASA and its subsidiaries. The parent company s financial statements comprise the balance sheet as at 31 December 2014, the income statement and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The consolidated financial statements comprise the balance sheet as at 31 December 2014, and the statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. The Board of Directors and the Managing Director s Responsibility for the Financial Statements The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of the parent company financial statements in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway and for the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Opinion on the separate financial statements In our opinion, the parent company s financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of RenoNorden ASA as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with the Norwegian Accounting Act and accounting standards and practices generally accepted in Norway. Opinion on the consolidated financial statements In our opinion, the consolidated financial statements are prepared in accordance with the law and regulations and give a true and fair view of the financial position of RenoNorden ASA and its subsidiaries as at 31 December 2014, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the EU. Report on Other Legal and Regulatory Requirements Opinion on the Board of Directors report, including the statement on Corporate Social Responsibility and the statement on Corporate Governance Based on our audit of the financial statements as described above, it is our opinion that the information presented in the Board of Directors report, including the statement on Corporate Social Responsibility and the statement on Corporate Governance concerning the financial statements, the going concern assumption and the proposal for the allocation of the profit is consistent with the financial statements and complies with the law and regulations. Opinion on Accounting Registration and Documentation Based on our audit of the financial statements as described above, and control procedures we have considered necessary in accordance with the International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, it is our opinion that the management has fulfilled its duty to produce a proper and clearly set out registration and documentation of the company s accounting information in accordance with the law and bookkeeping standards and practices generally accepted in Norway. Oslo, April 10, 2015 KPMG AS Bjørn Kristiansen State Authorized Public Accountant RenoNorden 63

66 Board of Directors Erik Thorsen Chairman Born MBA from University of Karlstad. Studies in mathematics and naval engineering from University of Oslo and Royal Norwegian Naval Academy. Elected Chairman of the Remuneration Committee. Other major assignments: Chairman: Metallkraft AS, Eltek ASA, Biotec Pharmacon ASA, Toleko AS and Zeropex AS. Previous assignments: Chairman: Energreen AS, Board member: Energreen Heat Recovery AS, Green Renewable Energy Holding Ltd, Nuclear Protection Products AS, Nera Telecommunications Ltd and managing director: REC ASA. Holdings in RenoNorden: 0 Penelope Kate Briant Board member Born Bachelor of Commerce and Accounting Honours, University of Cape Town, South Africa. Chartered Accountant. Elected Chairman of the Audit Committee. Other major assignments: Partner and investment committee member of funds advised by CapVest. Board Member, Scandi Standard AB, Mater Private and Valeo Foods. Previous assignments: Auditor, Board Member: Vaasan & Vaasan. Holdings in RenoNorden: 42,000 Alexander Noel Walsh Board member Board member Born Masters Degree, University of St. Andrews, UK. Elected Other major assignments: Board Member Scandi Standard AB. Co-founder and Board member of House of Botany Ltd,. Previous assignments: Principal at CapVest Board member: United Coffee, Scandza. Holdings in RenoNorden: 18,000 RenoNorden 64

67 Niklas Nikita Sloutski Board member Born MSc in Business and Economics from the Stockholm School of Economics, a Certificate in Business Administration from the Edinburgh Business School and course diplomas in finance from Harvard University and law from Stockholm University. Elected Member of the Audit Committee. Member of the Remuneration Committee. Other major assignments: Chairman: HoistLoca tel Group AB, Southpaw CEP AB, Northpaw Capital AB. Board member: Accent Equity Partners AB, Aviator Airport Alliance Europe AB, Candyking Holding AB, Eurowrap A/S, Scandic Hotels Holding AB, and CEO, board member and partner: Accent Equity Partners AB. Previous assignments: Board member: Bergteamet Group AB, NSS Group AS, Scanbook Holding AB, Crem International Holding AB, Mont Blanc Group AB. Chairman: INR Holding AB. Holdings in RenoNorden: 0 Charlotte G. Hansson Board member Born MSc in Market Economics from IHM in Stockholm. Scient. Cand. in Biochemistry from University of Copenhagen. Leadership-program Ruter Dam. Elected Member of the Audit Committee. Other major assignments: Managing Director MTD KB (MorgonTidigDistribution). Board member: Orio AB, DistIT AB, B&B Tools AB, BE Group AB, Formpipe Software AB. Founder of Scandinavian Insight Consulting AB. Previous assignments: Chairman: Co-Pilot Bygg & Projektledning, Board member: Oxeon. Managing director: Jetpak Finland & Denmark and Jetpak AB and associated companies. Holdings in RenoNorden: 0 Auditor Bjørn Kristiansen Lead Partner KPMG Norway. Svein Wiig Engagement Partner KPMG Norway. RenoNorden 65

68 Group management Staffan Ebenfelt, Chief Executive Officer Staffan Ebenfelt has been the Chief Executive Officer of RenoNorden ASA since January Prior to his appointment as CEO, Mr. Ebenfelt held several senior management positions within the hospitality and service management industry, including Coor Service Management Group and Ericsson Real Estate and Services. At Coor Service Management Group, Mr. Ebenfelt was responsible for the operation in Sweden and in the geographies outside of the Nordics. Mr. Ebenfelt was the founder and owner of European Service Advisors AB. Mr. Ebenfelt holds a diploma in Hospitality Management from the Hotel Institute Montreux in Switzerland and AH&MA. Mr. Ebenfelt is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions: Åkersberga Judoklubb (chairman). Previous directorships and senior management positions last five years: Coor Service Management Group (executive vice president) and Coor Service Management Sweden (CEO). Holdings in RenoNorden: 225,040 Jon Kristian Flesvik Chief Financial Officer Jon Kristian Flesvik has been the Chief Financial Officer of Asta Group AS (to be renamed RenoNorden ASA) since Prior to his appointment as CFO, he worked as CFO for Nordisk Mobiltelefon Norge AS (ICE) and various financial positions for Statoil ASA. Mr. Flesvik holds an MSc in Business Administration from the Norwegian Business School in Oslo. Mr. Flesvik is a Norwegian citizen, and resides in Norway. Current directorships and senior management positions: Tvice AS (owner, chairman and managing director) Previous directorships and senior management positions last five years: None. Holdings in RenoNorden: 130,266 Fredrik Eldorhagen Country Manager Norway Fredrik Eldorhagen has been the country manager of RenoNorden AS in Norway since Prior to his appointment as country manager, Mr. Eldorhagen worked as managing director of EFG HOV+DOKKA AS. Mr. Eldorhagen has held numerous positions within operations, strategy and sales and marketing, including ISS Facility Services AS, Gjensidige Bank and Insurance AS, Excellent AS and Talk2me AS (now Bring Dialogue). Mr. Eldorhagen holds an MSc in Marketing from the Norwegian Business School. Mr. Eldorhagen is a Norwegian citizen, and resides in Norway. Current directorships and senior management positions: Eldorhagen Industrier (owner). Previous directorships and senior management positions last five years: EFG HOV+DOKKA AS (managing director), Eldorhagen Industrier (owner), ISS Facility Services AS (sales and marketing director) and ISS Facility Services AS (divisional director route based services). Holdings in RenoNorden: 82,925 RenoNorden 66

69 Peter Ekholm Country Manager Sweden Peter Ekholm has been the country manager of RenoNorden AB in Sweden since Prior to his appointment, Mr. Ekholm held various managing positions within the Schenker logistics Group, including regional manager. Mr. Ekholm is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions: None Previous directorships and senior management positions last five years: Schenker Logistics AB (regional manager). Holdings in RenoNorden: 29,061 Torben Lindholm Country Manager Denmark Torben Lindholm has been country manager of RenoNorden A/S in Denmark since 2010, but had worked in the Renoflex Group since 1998 which was acquired by the Group in Mr. Lindholm has worked more than 23 years within the household-waste management industry, including holding positions with Renholdningsselskabet af 1898 and Renoflex. Mr. Lindholm holds an MSc in business from Copenhagen Business School and an MSc in Product Engineering from the Technical University of Denmark. Mr. Lindholm is a Danish citizen, and resides in Denmark. Current directorships and senior management positions: None Previous directorships and senior management positions last five years: Renoflex A/S (managing director and board member) and NordRen A/S (board member). Holdings in RenoNorden: 80,742 Andreas Westin Head of Development Andreas Westin has been Head of Development of the Group since Prior to joining the Group, Mr. Westin worked as a management consultant with A. T. Kearney and Capgemini Consulting, focusing on supply chain efficiencies, market strategy and operational excellence. Mr. Westin holds an MSc in Business Administration from Stockholm University and an MSc in Industrial Engineering from Linköping University. Mr. Westin is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions: Westindustries AB (owner). Previous directorships and senior management positions last five years: None. Holdings in RenoNorden: 39,799 Jukka Koivisto Country Manager Finland Jukka Koivisto has been country manager of RenoNorden Finland Holding Oy in Finland since 2014, but had worked in HFT Network Oy since 2002 and in HFT Environment Oy since 2010 which was acquired by the Group in Mr. Koivisto has more than 25 years of experience within the environmental business industry and has helped start up and develop numerous waste handling companies, such as WM Ympäristöpalvelut Oy and CCR Nordic Oy. Mr. Koivisto holds a BSc in Engineering from Arcada-Nylands Svenska yrkeshögskolan. Mr. Koivisto is a Finish citizen, and resides in Finland. Current directorships and senior management positions: Scandinavian Waste Management OY (board member), HFT Environment Oy (board member), HFT Network Oy (board member) and Lindbohm & Partners OY (board member). Previous directorships and senior management positions last five years: Environet Oy (board member). Holdings in RenoNorden: 165,814 RenoNorden 67